Tangshan Mining Is Considering Issuing Preferred Stock

question 17

Multiple Choice

Tangshan Mining is considering issuing preferred stock. The preferred stock would have a par value of $75 and a 5.50 percent dividend. What is the cost of preferred stock for Tangshan if flotation costs would amount to 5.5 percent of par value?

• A) 5.50%
• B) 5.27%
• C) 7.73%
• D) 5.82%

---

Definitions:

Free Trade

An economic policy that allows imports and exports between countries without regulatory barriers or tariffs.

South Asia

A region in Asia, comprising countries such as India, Pakistan, Bangladesh, and others, known for its diverse cultures and economies.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to profit from unequal prices.

Geographic Boundaries

Demarcated physical limits of geographical areas, which can include country borders, state lines, or natural barriers.