The Cost of Preferred Stock

question 57

Multiple Choice

The cost of preferred stock:

• A) is equal to the dividend yield.
• B) is equal to the yield to maturity.
• C) is highly dependent on the dividend growth rate.
• D) is independent of the stock's price.
• E) decreases when tax rates increase.

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Definitions:

Concise

Expressing or covering much in few words; brief in form but comprehensive in scope.

Electron Density

A measure of the probability of an electron being present in a specific location around an atom or molecule, important in determining molecular shape and bond strength.

Electron Wave

A quantum mechanical description of electrons as wave-like particles, significant in explaining the behavior of electrons in atoms and molecules.

π Bonds

Covalent chemical bonds resulting from the sidewise overlap of two atomic p orbitals, characterized by electron density above and below the axis of the bonded atoms.