Achieving an Increased Rate of Return on Common Stock by Paying

question 216

Multiple Choice

Achieving an increased rate of return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

• A)Financial leverage.
• B)Discount on stock.
• C)Premium on stock.
• D)Preemptive right.
• E)Capital gain.