Which of the Following Is Not True About Preferred Stock

question 55

Multiple Choice

Which of the following is not true about preferred stock?

• A)70% of dividends are nontaxable to other corporations that hold preferred stock.
• B)The after-tax cost is higher than debt with the same yield.
• C)Dividends are legal obligations of the firm.
• D)Preferred stocks are typically cumulative with respect to dividends.

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Definitions:

Ninety-Second Division

An infantry division of the United States Army that was composed entirely of African American soldiers during World War I.

Argonne-Meusse

Presumably a misspelling, likely referring to the Meuse-Argonne Offensive, a major part of the final Allied offensive of World War I that stretched along the entire Western Front.

Infantry Regiment

A military unit, typically consisting of soldiers who fight on foot.

Croix De Guerre

A French military decoration awarded to those who have shown bravery in battle; it was established in 1915 during World War I.