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.

---

Definitions:

Gateways

Entry or access points that enable transition or progress from one state or condition to another.

Functional Specialization

The practice of organizing a workforce where each member or department focuses on a specific set of tasks or expertise, promoting efficiency.

Divisional Departmentation

An organizational structure where divisions are formed based on products, services, markets, or geographic locations.

Matrix Departmentation

Is a combination of functional and divisional patterns wherein an individual is assigned to more than one type of unit.