Preferred Stock-Chapter 5

What types of stocks have dividends?

• common stock

• preferred stock

• chicken stock

• premium stock

If a company issues dividends, preferred stock holders are paid the dividends first.

• True
• False

Holders of preferred stock usually do not have voting rights

• True
• False

Preferred stock means the company is preferred over other companies in a particular industry.

• True
• False

Fixed dividends, moderate risk and first payment priority are the characteristics of ______?

• Common Stocks

• Callable Stock

• Preferred Stock

• Both B&C

What is the primary reason for a company to issue stock?

• The stocks help investors earn a higher rate of return
• To raise money to grow the company
• To distribute the risk of bankruptcy across more investors
• To increase greater awareness of the company

Stocks are items found in the storeroom of a grocery store.

• False
• True

Which of the following is the par value for preferred stock

• RM1,000

• RM1

• RM100

• RM10

What would be the price for a RM2.50 preferred stock when the prevailing market yield is 12 percent?

A preferred shares pays 8 percent fixed dividend annually. If the required rate of return is 16 percent, what is the intrinsic value of the preferred share?