Preferred Stock Is Similar to Common Stock in That

question 90

Multiple Choice

Preferred stock is similar to common stock in that

• A) it has no fixed maturity date.
• B) the nonpayment of dividends can bring on bankruptcy.
• C) dividends are limited in amount.
• D) both carry voting rights.

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Definitions:

Bonds With Warrants

Financial instruments that consist of a bond combined with a warrant, allowing the holder to purchase shares in the issuing company at a specified price.

Coupon Rate

The interest rate stated on a bond or fixed-income security that represents the annual interest paid to the bondholder.

Investment Bankers

Professionals who work in financial institutions, helping companies and governments with raising capital, mergers, and acquisitions.

Straight Bonds

Conventional bonds that pay a fixed interest rate over their lifetime and return the principal at maturity, without any special features or options.