Which of the Following Statements About Floating Rate Preferred Stock

question 33

Multiple Choice

Which of the following statements about floating rate preferred stock is true?

• A) The dividend rate changes quarterly.
• B) The price of the stock fluctuates with the market.
• C) The dividend rate is tied to the inflation rate.
• D) More than one of the options is true.

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Definitions:

Single-Index Structure

A model used in finance to describe the returns of a security as a function of a single market index.

Expected Returns

A rephrased definition for Expected Return: The anticipated income or profit from an investment over a specific period, considering various possible scenarios and their probabilities.

Variances of Returns

A statistical measure of the dispersion of returns for a given security or market index, showing the degree of variation from the average.

Beta

A measure of the volatility or systematic risk of a security or a portfolio compared to the market as a whole.