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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