Which of the Following Statements Is Correct

question 89

Multiple Choice

Which of the following statements is correct?

• A) A floating rate bond has an advantage over a fixed rate bond because its price is more stable and this makes a floating rate preferred bond more suitable as a liquid asset.
• B) Convertible preferred stock would likely appeal more to income-oriented investors because they can convert their capital gains into bond income simply by converting their preferred stock into bonds.
• C) One advantage of preferred stock from an issuer's perspective is that it has a lower after-tax cost than that of debt.
• D) One principal advantage of preferred stock is that preferred stockholders have a legal enforceable right to their stock dividend,thus,preferred stock is generally less risky than unsecured debt.
• E) Because of the 70% dividend exclusion rule for preferred stock dividends,the higher a company's tax bracket,the more likely it is to issue preferred stock.

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Definitions:

U.S. Bureau of Labor Statistics

A federal agency that collects and analyzes essential economic information related to labor market activity, working conditions, and price changes in the economy.

American Companies

refer to business enterprises based in the United States, known for their influence on the global economy and innovation in various sectors.

Overseas Companies

Businesses that operate outside their home country, engaging in international trade or services.

Discrimination

Your behavior, or what you do (or intend to do, or are inclined to do) as a result of your stereotypes and prejudice.