Is preferred stock a less desirable source of capital than bonds?
From a cost perspective, preferred stock is a less desirable source of capital for a firm than bonds. a. True b. False 4. A ____ requires that dividends cannot be paid on common stock until all current and previously omitted dividends are paid on preferred stock.
What happens to preferred stock if the firm does not pay dividends?
If the firm does not have sufficient earnings from which to pay the preferred stock dividends, the preferred shareholders may force the firm into bankruptcy. c. Normally, the owners of preferred stock do not participate in the profits of the firm beyond the stated fixed annual dividend. d.
What are the disadvantages of preferred stock?
Preferred stock usually does not allow for significant voting rights. b. If the firm does not have sufficient earnings from which to pay the preferred stock dividends, the preferred shareholders may force the firm into bankruptcy.
When managers believe that their firm's stock price is undervalued?
If managers believe that their firm's stock price is weak because it is undervalued by the market, they may consider repurchasing a portion of the shares that are outstanding. a. True b. Fals 82.
Which is the correct about preferred stock?
Preferred stock is a special type of stock that pays a set schedule of dividends and does not come with voting rights. Preferred stock combines aspects of both common stock and bonds in one security, including regular income and ownership in the company.
Which of the following is not the characteristics of preferred stock?
Explanation of Solution Therefore, ownership is the characteristic that does not sets the preferred stock apart from the common stock. Hence, it is the correct answer.
Which of the following is a feature of a preferred stock?
Preferred stocks are hybrid securities that have the characteristics of both bonds and stocks. Preferred stocks have dividend priority over common stock. The holders of preferred shares receive dividends before the holders of common shares. Preferred stockholders generally do not have voting rights in the company.
Which of the following statements concerning preferred stock is most correct?
Answer and Explanation: The most-correct statement is c. Preferred stock dividends are typically the same each year, allowing a preferred stock to be valued as a perpetuity.
What are three characteristics of preferred stock?
Features usually associated with preferred stock include:Preference in dividends.Preference in assets, in the event of liquidation.Convertibility to common stock.Callability (ability to be redeemed before maturity) at the corporation's option (possibly subject to a spens clause)Nonvoting.Higher dividend yields.
Which of the following are characteristics of preferred stock quizlet?
Characteristics of preferred stock: fixed div. payment. no maturity. cash dividends that are paid prior to distributions to common stockholders. no voting rights.
Which of the following is not a characteristic of most preference share issues?
All of the following are characteristics of preference shares except: They are either callable or putable. They generally do not have voting rights.
Which of the following is not a right or preference associated with preferred stock?
Option(A) the right to vote is the correct answer because this is not the right of the preferred stockholder, but it is the right...
Which of the following features of preferred stock makes the security more like debt than an equity instrument?
CardsTerm Who does the residual interest in a corporation belong to/Definition The Common stockholdersTerm Which of the following features of preferred stock makes the security more like debt than an equity instrument? Redeemable Voting Participating NoncumulativeDefinition Redeemable183 more rows•Apr 1, 2013
What is the significance of the name preferred stock?
A preferred stock is a class of stock that is granted certain rights that differ from common stock. Namely, preferred stock often possesses higher dividend payments, and a higher claim to assets in the event of liquidation.