Preferred Stock Is a Stock

question 100

Multiple Choice

Preferred stock is a stock:

• A)that sells for a very high price.
• B)that is distributed to employees of the company as a performance incentive.
• C)that is distributed by corporations to avoid liquidation.
• D)that gives its owners certain benefits over common stock.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, including expenses like rent, salaries, and insurance.

Variable Costs

Expenses that change in proportion to the activity of a business, such as utility bills that increase with production volume.

Cash Break-Even

The sales level where operating cash flow is equal to zero.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and loan payments.