Achieving an Increased Return on Common Stock by Paying Dividends

question 96

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

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Definitions:

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