Preferred Stock That the Issuing Corporation at Its Option May

question 25

Multiple Choice

Preferred stock that the issuing corporation at its option may retire by paying a specified amount to the preferred stockholders plus any dividends in arrears is called:

• A)Convertible preferred stock
• B)Callable preferred stock
• C)Premium stock
• D)Cumulative preferred stock
• E)Participating preferred stock

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital (debt, equity) is proportionately weighted.

Capital Component

Individual sources of funding that make up a company's capital structure, including debt and equity.

Accounts Payable

Accounts Payable is the account showing the amount a company owes to suppliers or vendors for goods or services purchased on credit.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources that a company aims to maintain to fund its operations and growth.