Question

A company issues 100,000 shares of preferred stock for $40 a share. The stock has fixed annual dividend rate of 5% and a par value of $3 per share. If sufficient dividends are declared, preferred stockholders can anticipate receiving dividends of:

A) $5,000 each year.

B) $15,000 each year.

C) 5% of net income each year.

D) $3 per share.

Answer

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