Which of the Following Describes Preferred Stock

question 43

Multiple Choice

Which of the following describes preferred stock?

• A) Stock that sells for a very high price
• B) Stock that is sold to employees of the company as a performance incentive
• C) Stock that is purchased by the corporation for investment purposes
• D) Stock which gives shareholders certain preferences and advantages over common stock

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Definitions:

Cash Flow Growth Rate

The rate at which a company's cash flow from operations increases over a given time period.

Required Rate

The minimum rate of return expected by investors on an investment or project.

Growing Annuity

An annuity that increases at a proportionate rate during the period of the contract, typically to combat inflation.