Which of the Following Is Incorrect with Respect to Preferred

question 8

Multiple Choice

Which of the following is incorrect with respect to preferred stock?

• A) Preferred stock is largely owned by other companies rather than individual investors.
• B) Preferred stock takes preference over common stock in bankruptcy proceedings.
• C) Preferred stock dividends do not grow.
• D) All of these choices are correct.

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Definitions:

ROA

Return on Assets, a financial ratio indicating the profitability of a company relative to its total assets.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is used to finance its overall operations and growth.

ROE

Return on Equity, measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activities into operating, investing, and financing activities.