No-Par Preferred Stock Has No Stated Face Value, but Its

question 131

True/False

No-par preferred stock has no stated face value, but its annual dividend is stated as a percentage of the market value.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting and investment appraisal.

Maturity Value

The amount due to be paid at the end of a financial instrument's term, including both the principal and any accrued interest.

Stated Interest Rate

The interest rate specified on a loan or investment agreement, not accounting for compounding or fees.

Prevailing Rate

The current interest rate or wage rate for a particular industry or geographic location.