Which of the following is true regarding preferred stock, common stock & debt? Preferred stock pays a dividend that is a tax deductible expense to the company. Common stock dividends are not tax deductible. Preferred stockholders have voting rights. Preferred shareholders have a higher claim on the firm's earnings than do bondholders. Preferred dividends are a contractual obligation of the firm. Common shareholders have voting rights. Dividends on common stock are perpetual. If a firm stops paying common dividends, it must repay shareholders those dividends it missed. Interest on debt is at at the discretion of management and can be stopped or suspended if the firm has financial difficulty. Preferred and common stock are perpetual - meaning that they have infinite maturities. Preferred & common dividends are not contractual obligations of the firm and are not tax deductible expenses. Preferred dividends, while not contractual, are much more stable than common dividends and are often considered to be like perpetual debt.

Which of the following is true regarding preferred stock, common stock & debt? Preferred stock pays a dividend that is a tax deductible expense to the company. Common stock dividends are not tax deductible. Preferred stockholders have voting rights. Preferred shareholders have a higher claim on the firm's earnings than do bondholders. Preferred dividends are a contractual obligation of the firm. Common shareholders have voting rights. Dividends on common stock are perpetual. If a firm stops paying common dividends, it must repay shareholders those dividends it missed. Interest on debt is at at the discretion of management and can be stopped or suspended if the firm has financial difficulty. Preferred and common stock are perpetual - meaning that they have infinite maturities. Preferred & common dividends are not contractual obligations of the firm and are not tax deductible expenses. Preferred dividends, while not contractual, are much more stable than common dividends and are often considered to be like perpetual debt.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 7GI

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Question

Which of the following is true regarding preferred stock, common stock & debt?
Preferred stock pays a dividend that is a tax deductible expense to the company. Common stock dividends are not tax
deductible. Preferred stockholders have voting rights.
Preferred shareholders have a higher claim on the firm's earnings than do bondholders. Preferred dividends are a
contractual obligation of the firm. Common shareholders have voting rights.
Dividends on common stock are perpetual. If a firm stops paying common dividends, it must repay shareholders those
dividends it missed. Interest on debt is at at the discretion of management and can be stopped or suspended if the firm has
financial difficulty.
Preferred and common stock are perpetual - meaning that they have infinite maturities. Preferred & common dividends are
not contractual obligations of the firm and are not tax deductible expenses. Preferred dividends, while not contractual, are
much more stable than common dividends and are often considered to be like perpetual debt.

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Which of the following statements is true regarding the payment of dividends to preferred shareholders? O a. Payments to debtholders are paid before dividends are paid to preferred shareholders. O b. Dividends to preferred shareholders are a tax-deductible expense to the issuing company. O c. Dividends to preferred shareholders are paid before payments are made to debtholders. O d. Dividends to preferred shareholders are paid after dividends are paid to common shareholders.
Indicate whether the following statements are true or false. If the statementis false, explain why.a. If a firm repurchases its stock in the open market, the shareholders whotender the stock are subject to capital gains taxes.
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Because common stock represents a residual interest in the corporation, the value of common stock is equal to the total firm value less the firm's outstanding debt. Select one: O True O False
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8. Which statement is true? Group of answer choices a. Preferred stock is similar to corporate bonds because the corporation usually pays the holders of the securities a fixed amount. b. Preferred stockholders have priority over bondholders when it comes to the payment of c. Preferred stock is similar to corporate bonds because dividends on preferred stock, like interest on bonds, are a tax-deductible expense to the corporation. d. Preferred stockholders are considered to be the true owners of corporations.
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