Preferred Stock Is Like Long-Term Debt in That ________

question 24

Multiple Choice

Preferred stock is like long-term debt in that ________.

• A) it gives the holder voting power regarding the firm's management
• B) it promises to pay to its holder a fixed stream of income each year
• C) the preferred dividend is a tax-deductible expense for the firm
• D) in the event of bankruptcy preferred stock has equal status with debt

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Definitions:

Transfer

The act of moving or conveying property or rights from one party to another.

Primary Liability

The obligation falls directly on the individual or entity primarily responsible for an obligation, especially in financial transactions.

Principal's Name

The name of the main party or entity involved in a financial or legal transaction.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer named on the document.