Which Statement Regarding Preferred Stocks Is True

question 52

Multiple Choice

Which statement regarding preferred stocks is true?

• A)Preferred stockholders have a priority to income but not to liquidation proceeds over bondholders in the event of bankruptcy.
• B)The preferred stock of a given firm is generally less risky to investors than the same firm's common stock.
• C)Preferred dividends are not generally cumulative.
• D)A big advantage of preferred stock is that dividends on preferred stocks are tax deductible by the issuing corporation.

Recognize the legal protections and requirements for consumers and banks under the Uniform Commercial Code (UCC) related to check alterations and forgeries.

Understand the relationship between the drawer, drawee, and payee in the context of check transactions.

Learn about the obligations and liabilities of drawers and endorsers regarding check alterations, negligence, and recovery.

Understand the process and legal implications of check collection within the banking system.

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Definitions:

Net Carrying Amount

The value of an asset recorded in a company's financial statement, which is the original cost minus accumulated depreciation and impairment losses.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, reflecting the value of the business's reputation, brand, and other unquantifiable assets.

Impairment Test

A process used to determine if an asset's carrying amount exceeds its recoverable amount, indicating the asset may be impaired and its value should be written down.

Business Combination

The merger or acquisition of two or more companies to form a single business entity, often to enhance strategic positioning or achieve synergies.