Which of the Following Statements Concerning Preferred Stock Is Most

question 113

Multiple Choice

Which of the following statements concerning preferred stock is most correct?

• A) Preferred stock is valued the same as zero coupon bonds because the cash flow patterns are similar.
• B) If a corporation issues 4% preferred stock with a par value of $100, the dividend will increase by 4% per year.
• C) Preferred stock dividends are typically the same each year, allowing a preferred stock to be valued as a perpetuity.
• D) Preferred stock dividends are calculated as a percentage of common stock dividends, although the preferred stock dividends must be paid first.

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Definitions:

Duress

A situation where a person performs an act as a result of violence, threat, or other pressure against the person.

Embezzlement

The dishonest act of taking funds or property for oneself that has been entrusted to care for, but is actually owned by another individual.

Monthly Payments

Regular payments made in a partitioned amount over a specified period, commonly associated with loans or leases.

Duress

Coercion or force exerted upon someone to compel them to act against their will or make a legal agreement under pressure.