If the Interest Rate Is 5%,the One-Year Discount Factor Is

question 16

Multiple Choice

If the interest rate is 5%,the one-year discount factor is equal to:

• A)0.050.
• B)1.050.
• C)0.952.
• D)1.045

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Definitions:

Participating Right

A feature of certain securities that allows the holder to receive dividends or other benefits in addition to the basic rights associated with the security.

Outstanding Stock

Shares of a corporation that have been issued and are currently held by investors, including public shareholders and company insiders.

Authorized Stock

The maximum number of shares a corporation is legally permitted to issue, as specified in its corporate charter.

Noncumulative Nonparticipating

Noncumulative nonparticipating refers to a type of preferred stock where dividends do not accumulate if not declared and the stockholders do not participate in additional corporate earnings beyond the specified dividend rate.