J&S Corporation Has Preferred Stock Which Paid an Annual Dividend

question 39

Multiple Choice

J&S Corporation has preferred stock which paid an annual dividend in 2009 of $5 per share.J&S also has common stock which paid a dividend in 2009 of $5.Which of the following statements is most correct concerning J&S stock?

• A) The price of the preferred stock should equal the price of the common stock since the dividends are the same.
• B) The price of the common stock could be higher than the price of the preferred stock if the common stock dividends are expected to grow in the future.
• C) The price of the preferred stock is expected to be higher than the price of the common stock because the required return on preferred stock is higher than the required return on common stock.
• D) If the required return on the preferred stock is the same as the required return on the common stock, then the price of preferred stock should equal the price of the common stock if markets are efficient.

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Definitions:

Normally Closed Relay

A normally closed relay is a type of relay where the contact points are closed (i.e., the circuit is complete and can carry current) when the relay is not energized, and open when it is energized.

Input Combinations

Input combinations refer to the specific sets or arrangements of input conditions or signals that determine the output or behavior of a system or circuit.

Y Output

A designation for an output point or terminal in PLCs and control systems, commonly used to control actuators and other output devices.

Energized

Referring to a state where an electrical component or circuit has power supplied to it and is operational.