Use the following three statements to answer this question 1. Dividends are the legal obligation of the firm 2. A firm's residual earnings technically belong to the preferred shareholders 3. The market prices of preferred shares increase when market rates decline, and vice versa A) only 1 is correct B) only 2 is correct C) only 3 is correct D) 2 $ 3 are correct E) 1 & 3 are correct

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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F2

Use the following three statements to answer
this question
1. Dividends are the legal obligation of the
firm
2. A firm's residual earnings technically belong
to the preferred shareholders
3. The market prices of preferred shares
increase when market rates decline, and vice
versa
A) only 1 is correct
B) only 2 is correct
C) only 3 is correct
D) 2 $ 3 are correct
E) 1 & 3 are correct
Transcribed Image Text:Use the following three statements to answer this question 1. Dividends are the legal obligation of the firm 2. A firm's residual earnings technically belong to the preferred shareholders 3. The market prices of preferred shares increase when market rates decline, and vice versa A) only 1 is correct B) only 2 is correct C) only 3 is correct D) 2 $ 3 are correct E) 1 & 3 are correct
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