A Call Provision Associated with a Preferred Stock Issue

question 41

Multiple Choice

A call provision associated with a preferred stock issue

• A) Is generally advantageous to investors because it provides increased marketability for the security.
• B) Will never influence the market price of the security.
• C) Will tend to prevent the market price of the preferred stock from falling below its preset call price.
• D) Is likely to be used by the company at a time when investors will have to reinvest at lower interest rates.
• E) Is unimportant since preferred stocks never have call features.

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