A Firm Has Determined It Can Issue Preferred Stock at $115

question 66

Multiple Choice

A firm has determined it can issue preferred stock at $115 per share par value. The stock will pay a $12 annual dividend. The cost of issuing and selling the stock is $3 per share. The cost of the preferred stock is ________.

• A) 6.4 percent.
• B) 10.4 percent.
• C) 10.7 percent.
• D) 12 percent.

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Definitions:

Bank Notes

Paper money issued by banks that is used as legal tender and is backed by the promise to pay the bearer the value of the note on demand.

Lincoln

The 16th President of the United States, Abraham Lincoln, who led the country during the Civil War and worked to end slavery.

Issue of Slavery

A central and contentious problem in American history, focusing on the ethical, moral, and economic concerns surrounding the practice of slavery, particularly in the 18th and 19th centuries.

Pro-Union Majority

A predominance of individuals or political entities that support the maintenance and unity of a federated state or union, especially relevant in the context of the Civil War in the United States.