Which of the Following Statements About Floating-Rate Preferred Stock Is

question 9

Multiple Choice

Which of the following statements about floating-rate preferred stock is correct?

• A) Its dividends increase as interest rates increase.
• B) Its market price increases at a set rate annually.
• C) It is the only stock issued without a par value.
• D) Its dividends are deductible for tax purposes by the paying corporation.

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Definitions:

Colas

Cost-of-living adjustments (COLAs) are automatic adjustments made to salaries, wages, or benefits to counteract the effects of inflation.

Marginal Utility

The increase in happiness or usefulness experienced by a consumer when one more unit of a good or service is consumed.

Good A

A placeholder term that typically represents a general or unspecified item in economic models or discussions.

Good B

A term representing a specific product or service under consideration in an economic model or market analysis.