Achieving an Increased Return on Common Stock by Paying Dividends

question 141

Multiple Choice

Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

• A)Financial leverage.
• B)Discount on stock.
• C)Premium on stock.
• D)Preemptive right.
• E)Capital gain.

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Definitions:

Tube Worms

Marine invertebrates belonging to several different families, known for living in protective tubes they construct, which can be found in various ocean environments including hydrothermal vents.

Benthic Zone

The lowest ecological zone in a body of water, including the sediment surface and sub-surface layers.

Nutrient-rich

Containing a high concentration of essential nutrients necessary for healthy growth and development.

Upwelling

Upward movement of deep, nutrient-rich water along coasts; it replaces surface waters that move away from shore when the direction of the prevailing wind shifts.