A Firm Has $2 Million Market Value and It Sells

question 44

Multiple Choice

A firm has $2 million market value and it sells preferred stock with a par value of $100. If the coupon rate on the preferred stock is 6% and the preferred stock trades at $98, what is the cost of preferred stock capital?

• A) 5.82%
• B) 6.12%
• C) 6.43%
• D) 6.73%

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Definitions:

Sick Leave Programs

Employer-provided benefits that allow employees to take time off work with pay when they are ill, to ensure health recovery without the loss of income.

Family and Medical Leave Act

A federal law in the United States that grants eligible employees the right to take unpaid, job-protected leave for family and medical reasons.

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Specific criteria or conditions that individuals must meet in order to qualify for a program, service, or position.