The Price of Preferred Stock May React Strongly to a Change

question 98

Multiple Choice

The price of preferred stock may react strongly to a change in k_pbecause

• A) preferred stock may be cumulative.
• B) preferred stock dividends have to be paid before common stock dividends.
• C) there is no maturity date.
• D) corporate recipients of preferred stock dividends may receive a partial tax exemption.

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Definitions:

Electronic Trading

The use of computer systems and technology to facilitate trading in financial markets without the need for physical trading floors.

General Partnership

A business partnership where all partners share unlimited personal liability for the business's debts and obligations.

Taxed

To impose a financial charge or levy upon an individual or entity by a governmental organization.

Corporate Level

Refers to the highest level of strategic decision-making and planning in a business organization.