Which of the Following Statements Is Not Correct

question 3

Multiple Choice

Which of the following statements is not correct?

• A) The special rights of preferred shares make them less attractive to purchase than ordinary shares.
• B) The special rights of preferred shares can take many forms,which may combine pecuniary advantage and different voting rights.
• C) The basic idea behind preferred shares is that they allow capital to be raised without necessarily creating a proportional dilution,or without creating a shift in stewardship away from the original shareholders.
• D) Preferred shares generally represent a trade-off between return and control: either higher dividends but reduced voting rights,or higher voting rights but lower returns.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services provided on credit.

Paper Company

A business entity created, often in a tax haven, for the purpose of managing investment or conducting transactions without engaging in operational business activities.

Interest Calculation

The process of determining the amount of interest earned or paid on a financial instrument or account, based on the principal, the rate, and the time.

Fair Value

The price that would be received for an asset if it were sold today.