The Cost of Preferred Stock

question 9

Multiple Choice

The cost of preferred stock

• A)increases as the beta of the firm increases.
• B)is equal to the annual dividend divided by the par value of the stock.
• C)is equal to the annual dividend divided by the present value of all the future dividend payments.
• D)varies as tax rates vary.
• E)is generally computed using the CAPM.

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Definitions:

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