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The correct response is C 0.10. Cisk Devices is issuing preferred stock with a share price of $200 and a dividend payment plan of $20 per share year. The cost of this Preferred Stock is most closely related to: with a marginal tax rate of 50% is 0.10.
Preferred stock, which is also known as preferred shares, preference shares, or simply preferreds, is a type of share capital that may have a variety of characteristics that common stock does not, such as characteristics of both an equity and a debt instrument. The majority of people consider it a hybrid instrument. Although preferred stocks are subordinate to bonds in terms of claim (or rights to their share of the company's assets, given that these assets are payable to the returnee stock bond), preferred stocks are senior to common stock (i.e., higher ranking) and may have priority over common stock (ordinary shares) in the payment of dividends and upon liquidation. The issuing company's articles of association or articles of incorporation provide information about the preferred stock's terms. Major credit rating firms provide preferred stock ratings similarly to bonds. Due to the fact that preferred dividends are not as guaranteed as bond interest payments and that preferred stock holders' claims are subordinate to all other creditors, their ratings are often lower than those of bonds. Similar to preferred stock, preferred equity is a type of private investment where the common stock isn't sold publicly. As a result, private equity lacks the public credit rating of preferred stock.
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Cisk Devices is issuing preferred stock which is priced at $200/share and scheduled to pay dividends of $20 per share per year. With a marginal tax rate of 50%, the cost of this preferred stock is closest to:
A 0.00
B 0.05
C 0.10
D 0.20
E 0.25
