What is the difference between common and preferred stock dividends?
A. Dividends are paid before common B. Dividends are paid quarterly C. Dividends are based on corporate earnings D. Preferred shareholders have a senior claim to common shareholders B. Dividends are paid quarterly ABC gold mining company has issued a preferred stock. Dividends on the issue may be paid as: A. Cash only
What happens to preferred stock if a company fails to pay dividends?
B) Failure to pay dividends will result in default. C) Preferred stock has a lower-priority claim on the firm's assets than the firm's creditors in the event of default. D) Preferred stock typically pays a fixed dividend.
What happens to preferred stock prices when interest rates fall?
When interest rates fall, preferred stock prices rise D. When interest rates fall, preferred stock prices rise ABC 10% $100 par preferred is trading at $115 in the market. The current yield is:
What is the dividend rate for a cumulative convertible preferred stock?
The dividend rate is 8%. Each dividend payment would be... A corporation has issued $100 par, 8% cumulative convertible preferred stock callable at par. The preferred is convertible into 1.4 shares of common stock. Currently, the preferred stock is trading at $102, while the common stock is trading at $75.50.
Which statement is true preferred stock?
Which statement is TRUE regarding preferred stock payments? Preferred dividends are typically fixed and are generally higher than those paid to common stockholders.
What is true about preferred stock compared to common stock quizlet?
Preferred stock has preference over common as to the payment of dividends and as to assets upon liquidation. Preferred dividends are, in most cases, paid semi-annually, as compared to common stock dividends that are paid quarterly. The best answer is A. Dividends on preferred stock are paid solely in cash.
What is preferred stock quizlet?
Preferred stock. A class of ownership in a corporation that has a priority claim on its assets and earnings before common stock, generally with a dividend that must be paid out before dividends to common shareholders are paid.
Which of the following statements concerning preferred stocks is 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 is preferred stock dividend?
The best answer is A. Dividends on preferred stock are paid solely in cash. Dividends on common stock may be paid in cash; stock; stock of another company (such as shares of a subsidiary company) or products of that company.
What is cumulative preferred?
Cumulative preferred means that if the issuer misses dividend payments, these accumulate and must be paid in full before a common dividend can be paid (all preferred is cumulative). Participating preferred gets to participate with common in any "extra" dividends that are declared by the company Board of Directors.
What is convertible stock?
Convertible securities are convertible into common at a predetermined ratio. If the common stock price rises above the conversion price, then the convertible security will trade at the value of the equivalent number of common shares. For example, assume that $100 par common stock is convertible at $20 per share. If the common stock price moves to $25, the preferred must trade for $125, because it is equivalent to 5 common shares.
What happens when interest rates fall?
Thus, calls take place when interest rates have fallen.
Is there such a thing as refundable preferred stock?
The best answer is D. There is no such thing as refundable preferred stock. Participating preferred (also known as performance preferred) allows the holder to receive additional dividend distributions from the issuer if the issuer is having a good year. Cumulative preferred "accumulates" any unpaid dividends. Before a common dividend may be paid, all accumulated dividends must be paid to cumulative preferred shareholders.
Is preferred dividend fixed?
The best answer is A. Preferred dividends are typically fixed and are generally higher than those paid to common stockholders. Preferred dividends (NOT interest) are, in most cases, paid semi-annually, as compared to common stock dividends that are paid quarterly.
Is preferred stock a renewable security?
The best answer is A. Preferred stock is not a renewable security; there is no stated maturity or redemption date. Preferred stock is a negotiable security, meaning that it is traded. Preferred stock can be callable, cumulative, and convertible.
How much dividend do you have to pay in a preferred stock?
Since the preferred stock is cumulative, to make a dividend distribution to common shareholders, the company needs to pay all back, unpaid dividends plus this year's dividend (before a common dividend can be paid). The stated dividend rate on the preferred is 10% based on $100 par. Two years ago the entire dividend was omitted, so $10 per share must be paid. Last year, the corporation only paid $5, so there is another $5 that must be paid. Also, this year's dividend of $10 must be paid. The total dividend that must be paid is $25 per preferred share before a common dividend can be paid.
How often are dividends paid?
B. In most cases dividends are paid semi-annually
What happens if ABC pays 10% dividend?
If ABC declares and pays a 10% "common" stock dividend, the customer who holds non-convertible or convertible preferred stock would not benefit in any way. Thus, due to the payment of a common stock dividend, the customer would still have 100 shares of the non-convertible preferred stock.
Does ABC pay a dividend?
Two years ago, ABC paid a 4% preferred dividend. Last year, ABC paid a 5% preferred stock dividend. This year, ABC wishes to pay a common dividend. If the preferred stock is now trading at $94, a customer who owns 100 shares of the company's preferred stock will receive:
Does XYZ pay a preferred dividend?
XYZ Company has issued 10%, $100 par cumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. Last year, it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of:
Which stock has a lower yield?
convertible preferred stock will have a lower yield than non-convertible preferred stock
Which has a higher yield, convertible or non-convertible?
A. convertible preferred stock will have a higher yield than non-convertible preferred stock
How often are dividends paid?
B. in most cases dividends are paid semi-annually
Can the conversion ration be determined?
D. The conversion ration cannot be determined
Does XYZ pay a preferred dividend?
XYZ Company has issued 10%, $100 par noncumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. Last year, it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to shareholders, each preferred share must be paid a dividend of...
Who are the preferred stockholders?
A) Preferred stockholders are considered to be the true owners of public corporations.
Which simplifying assumptions cover most stock growth patterns?
The three simplifying assumptions that cover most stock growth patterns are. a. dividends that stay constant over time, dividends that grow at a constant rate, and dividends that are equal to zero . b. dividends that have a zero-growth rate, dividends that grow at a varying rate, and dividends that are equal to zero.
How can the value of a growth stock be determined?
C) It implies that the value of a growth stock can be determined by forecasting the future price of the stock.
What is secondary market?
a. In secondary markets, outstanding shares of stock are bought and sold among investors.
Where are secondary market transactions done?
d. In the United States, most secondary market transactions are done on one of the many stock exchanges
Is a firm listed on the NASDAQ larger than a firm listed on the NYSE?
c . Firms listed on the NASDAQ tend to be, on average, larger in size, and their shares trade more frequently than firms whose securities trade on NYSE.
Can preferred stock be converted to common stock?
D) Preferred stock can never be converted to common stock.