The Price of Preferred Stock May React Strongly to a Change

question 96

Multiple Choice

The price of preferred stock may react strongly to a change in K_p (required rate of return) because

• 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:

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The act of assisting and serving customers to meet their needs and ensure their satisfaction with a product or service.

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