Reference no: EM131989833

1. If the firm's P/E ratio is too low relative to that of similar firms, it means that the market has overvalued its current earnings

Which of the following is included in the call provision of a preferred stock??

a. ?Preferred stock can participate with the common stock in sharing the firm's earnings.

b. ?Preferred stockholders have priority over common stockholders with regard to assets of the firm.

c. Preferred stockholders can elect the members of the board of directors and also vote on corporate issues.?

d. ?Preferred stockholders have the right to receive preferred dividends previously not paid, to be disbursed before any common stock dividends can be paid.

e. ?Preferred stock can be redeemed by incorporating a maturity option to a preferred stock issue.

2. Which of the following is determined by decreasing a firm's after-tax operating income by the costs associated with both the debt and the equity issued by the firm?

a. A firm's economic value added

b. A firm's intrinsic value of stock

c. A firm's expected capital gains yield

d. A firm's price earnings ratio

e. A firm's nonconstant growth of stock