Which of the Following Statements Is Most CORRECT

question 15

Multiple Choice

Which of the following statements is most CORRECT?

• A) by law in most states, all preferred stock must be cumulative, meaning that the compounded total of all unpaid preferred dividends must be paid before any dividends can be paid on the firm's common stock.
• B) from the issuer's point of view, preferred stock is less risky than bonds.
• C) whereas common stock has an indefinite life, preferred stocks always have a specific maturity date, generally 25 years or less.
• D) unlike bonds, preferred stock cannot have a convertible feature.
• E) preferred stock generally has a higher component cost of capital to the firm than does common stock.

---

Definitions:

Total Expenses

The sum of all costs and expenses associated with operating a business or executing a project.

Profit

The financial gain obtained when the revenue from selling goods or services exceeds the costs associated with production and distribution.

Linked Prosperity

A business philosophy that emphasizes creating economic value in a way that also produces value for society by addressing its challenges.

ISO 9000

A set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements to be implemented to maintain an efficient quality system.