Question

Corporations that invest surplus funds in floating-rate preferred stock benefit from getting a relatively stable price, which is desirable for liquidity portfolios, and they also benefit from the 70% tax exemption on preferred dividends received.

A.True
B.False

Answer 1

Corporations benefit from stable prices and tax exemptions when investing in floating-rate preferred stock.

Step-by-step explanation:

Corporations that invest surplus funds in floating-rate preferred stock benefit from getting a relatively stable price, which is desirable for liquidity portfolios, and they also benefit from the 70% tax exemption on preferred dividends received. Therefore, the statement that corporations benefit from stable prices and tax exemptions when investing in floating-rate preferred stock is true.