Whenever the Dividend Rate on Preferred Shares Is Higher Than

question 22

True/False

Whenever the dividend rate on preferred shares is higher than the rate the corporation earns on its assets,the effect of issuing preferred shares is to increase the dividend rate earned by common shareholders.

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Definitions:

F Distribution

A probability distribution that arises in the analysis of variance and is used to calculate differences among group means when the groups have different sizes.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, often related to the number of values in the final calculation of a statistic that are free to vary.

F Distribution

A probability distribution that arises frequently as the null distribution of a test statistic, especially in the context of variance analysis or ANOVA.

Numerator

The top number in a fraction that represents the part of the whole or the dividend in division.