What Is the After-Tax Cost of Preferred Stock That Sells

question 109

Multiple Choice

What is the after-tax cost of preferred stock that sells for $10.00 per share and offers a $1.20 dividend when the tax rate is 35%?

• A) 4.20%
• B) 7.80%
• C) 8.33%
• D) 12.00%

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Definitions:

Standard Deviation

The statistical metric that calculates the dispersion or spread of data points in a dataset around the average value.

Raw Score

An untreated score before manipulation or processing to make it a standard score, as must be done for all norm-referenced tests. Raw scores alone tell us little, if anything, about how a person has done on a test. We must take an individual’s raw score and do something to it to give it meaning.

Publisher Score

The score provided or established by the entity responsible for creating and distributing a test, indicating a test taker's performance relative to predefined criteria or norms.

Ordinal Scale

A scale of measurement in which the magnitude or rank order is implied; however, the distance between measurements is unknown.