Preferred stock from the common stockholders perspective

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Reference no: EM132062969

1. Hewitt Packing Company has an issue of $1,000 par value bonds with a 14 percent annual coupon interest rate. The issue has ten years remaining to the maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. The current value of each Hewitt bond is ________.

A. $791.00

B. $1,113.00

C. $1,052.24

D. $1,000

2. The first step in the capital budgeting process is ________.

A. decision making

B. implementation

C. proposal generation

D. review and analysis

3. Which of the following is a disadvantage of issuing preferred stock from the common stockholders' perspective?

A. Issuance of preferred stocks will result in a higher risk, to the disadvantage of common stockholders.

B. The preferred stockholders are always paid a higher proportion of dividend payments.

C. The preferred stockholders have superior voting rights in the selection of board of directors.

D. There is a seniority of preferred stockholder's claim over common stockholders.

Reference no: EM132062969

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