63 776
Assignments Done
99,3%
Successfully Done
In August 2018

Answer to Question #6133 in Economics of Enterprise for Lamarcus Streeter

Question #6133
3. Which of the following statements is CORRECT?

a. A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.
b. Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm’s common stock, and, as a result, the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.
c. The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis) new issues of preferred stock.
d. One of the disadvantages to a corporation of owning preferred stock is that 70% of the dividends received represent taxable income to the corporate recipient, whereas interest income earned on bonds would be tax free.
Expert's answer
Correct answer is c :
The preemptive right is a provision in all corporate
charters that gives preferred stockholders the right to purchase (on a pro rata
basis) new issues of preferred stock.
It's one of the advantages and
features of preferred stocks turnover

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

Assignment Expert
10.04.14, 15:30

Assignment Expert
10.04.14, 15:29

Kimberley Owen
27.07.13, 21:06

The answer is incorrect.

Christopher Hindman
26.07.13, 17:44

This answer is wrong. The preemptive right does not apply to preferred stockholders, only common stock holders.

Leave a comment

Ask Your question

Submit
Privacy policy Terms and Conditions