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:
Who are the preferred stockholders of a corporation?
the common stockholders the preferred stockholders the bondholders two of the options are true the common stockholders To the corporate investor, preferred stock offers which of the following advantages? a higher yield than debt, everything else being equal before taxes 30% of preferred dividends are tax-exempt
When are floating rate bonds most likely to be popular?
the lease must have a value of at least $10 million the present value of the minimum lease payments is at least 75% of the fair value of the asset all of these options are correct the lease contains a bargain purchase price at the end of the lease Floating rate bonds are most likely to be popular with investors when it is anticipated that
What is the difference between preferred stock and dividend?
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 B. Cash or additional preferred shares of ABC C. Cash or additional common shares of ABC D. Cash or gold bullion
Which of the following statement concerning preferred stock 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.
Which one of the following accurately describes the features of preferred stock?
All of the following accurately describe preferred stock except: Carries voting rights. Which of the following statements about stock dividends is inaccurate?
What is floating rate preferred stock?
Floating Rate Preferreds: Sometimes referred to as a “variable rate” preferred share, this type of issue pays dividends quarterly or monthly with a rate that fluctuates, or “floats”, with a market interest rate such as a major bank's prime rate.
What are the 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.
What are the characteristics of 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.
What happens to preferred stock when interest rates rise?
Just like bonds, which also make fixed payments, the market value of preferred shares is sensitive to changes in interest rates. If interest rates rise, the value of the preferred shares falls. If rates decline, the opposite would hold true.
What is fixed to floating rate?
A fixed-for-floating swap is a contractual arrangement between two parties in which one party swaps the interest cash flows of fixed-rate loan(s) with those of floating-rate loan(s) held by another party. The principal of the underlying loans is not exchanged.
What is preferred stock?
What is preferred stock? Preferred stock is a type of stock that offers different rights to shareholders than common stock. Preferred stock holders receive regular dividends and are repaid first in the event of a bankruptcy or merger.
Why is cash flow used in capital budgeting?
The reason cash flow is used in capital budgeting is because. cash rather than income is used to purchase new machines. cash outlays need to be evaluated in terms of the present value of the resultant cash inflows.
What is the effect of rights offering on stockholders?
The effect of a rights offering on a stockholder is. the right to sell stocks, in which the stockholder's wealth only increases if the stock is sold. the right to own more stocks, in which the stockholder's wealth increases only if the new stock is purchased. the right to own more shares at a cheaper price, while the wealth ...
What is the gain from the sale of an asset?
a gain from the sale of the old asset will represent a tax savings inflow. only incremental cash flows should be considered. the sale price and tax savings will increase the cash inflows throughout the asset's life. net present value can no longer be measured in replacement analysis.
What is an ex-rights stock?
A stock is said to sell "ex-rights". when the period in which the subscription privilege is to be exercised has expired. when the stockholder buys the stock, they no longer get a right toward the future purchase of stock. after the rights have all been exercised and the new issue is completely sold.