Preferred Stock May Be Desirable to Issue for Which of the Following

question 17

Multiple Choice

Preferred stock may be desirable to issue for which of the following reason(s) ?

• A)If there is no taxable income, preferred stock does not impose a tax penalty.
• B)The failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.
• C)Preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.
• D)Both B and C.
• E)Both A and B.

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Definitions:

Ordering and Carrying Inventory

Refers to the costs associated with ordering and holding inventory, including storage, management, and insurance.

Safety Stock

Additional quantity of an item held in inventory to reduce the risk of stockouts, often due to variability in supply or demand.

Memory Chips

Memory chips are semiconductor devices used in electronic systems to store data temporarily or permanently, such as RAM (Random Access Memory) or ROM (Read-Only Memory) in computers and other devices.

Minimum Cost

This refers to the lowest possible expense incurred in acquiring, producing, or maintaining a product or service without compromising quality or performance.