Firms Must Make Regular Payments to ________ but Are Under

question 34

Multiple Choice

Firms must make regular payments to ________ but are under no contractual obligation to pay dividends to ________.

• A)common stockholders; preferred stockholders.
• B)preferred stockholders; bondholders.
• C)bondholders; common stockholders.
• D)common stockholders,bondholders.

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Definitions:

Priced Factor

An element affecting the pricing of securities that is reflected in market prices due to its influence on asset returns.

Market Illiquidity

A situation in which an asset cannot be easily sold or exchanged for cash without a substantial loss in value.

Book-to-market Ratio

A valuation metric comparing the book value of a company to its market price.

Momentum

An investment strategy that involves buying securities that have had high returns over a certain period and selling those that have had poor returns, based on the belief that trends will continue.