Preferred Stock

question 30

Multiple Choice

Preferred stock:

• A) represents the residual ownership of a corporation.
• B) is generally issued only by new firms that are small in size.
• C) has a fixed maturity date similar to a bond.
• D) dividends can be skipped at the discretion of the company president.
• E) may or may not be cumulative.

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Definitions:

Short Run

A time period in which at least one input is fixed and cannot be changed by the firm, affecting its production decisions.

Purely Competitive Market

Another term for a perfectly competitive market, emphasizing its features like a large number of small firms and identical products.

Marginal Revenue

The increased earnings resulting from the sale of one extra unit of a good or service.

Marginal Cost

The increased cost resulting from the production of an additional unit of a good or service.