Which of the Following Regarding Preferred Stock Is True

question 86

Multiple Choice

Which of the following regarding preferred stock is true?

• A) If the price decreases, the required rate of return has decreased.
• B) If the required rate of return increases, the price decreases.
• C) If the required rate of return increases, the price increases.
• D) The price in the market remains at par.

---

Definitions:

Federal Taxes

Taxes imposed by the federal government on income, sales, imports, estates, and gifts.

State And Local Taxes

Taxes imposed by individual states, counties, or municipalities within a country, in addition to federal taxes.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other assets at a specified price within a specific time period.

Specified Exercise Price

The predetermined price per share at which the holder of an option can buy (call option) or sell (put option) the underlying security.