Which of the Following Statements Is CORRECT

question 78

Multiple Choice

Which of the following statements is CORRECT?

• A) A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.
• B) Preferred stock is normally expected to provide steadier,more reliable income to investors than the same firm's common stock.As a result,the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.
• C) The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis)new issues of preferred stock.
• D) One of the disadvantages to a corporation of owning preferred stock is that 50% of the dividends received represent taxable income to the corporate recipient,whereas interest income earned on bonds is tax free.
• E) One of the advantages to financing with preferred stock is that 50% of the dividends paid out are tax deductible to the issuer.

---

Definitions:

Textiles

Materials made by weaving, knitting, crocheting, or bonding that are used to make fabrics for clothing and many other items.

Black Life

Refers to the experiences, culture, and societal contributions of people of African descent.

An American Dilemma

An American Dilemma is a landmark sociological study by Gunnar Myrdal (1944) that addressed the problem of race relations and racial injustice in the United States, highlighting the contradiction between the American ideals of equality and the treatment of African Americans.

Gunnar Myrdal

A Swedish economist and sociologist, known for his influential study on race relations in the United States titled "An American Dilemma" (1944).