Many Preferred Stocks Have a Feature That Requires a Firm

question 48

Multiple Choice

Many preferred stocks have a feature that requires a firm to periodically set aside an amount of money for the retirement of its preferred stock.What is the name of this feature?

• A) Convertible
• B) Callable
• C) Cumulative
• D) Sinking fund

---

Definitions:

Equity

The amount of money that would be returned to shareholders if all of the assets were liquidated and all the company's debts were paid off.

Capital Stock

The total amount of shares that a company can issue as authorized by its corporate charter, representing ownership in the company.

Redeemed Stock

Shares that have been bought back or repaid by the issuing company.