Question

The floating rate feature on preferred stock allows the shareholders

select one
a) to receive more dividends than the quoted yield when the firm enjoys a good year
b) to pay lower taxes when the dividend yield increases
c) to receive dividends which the corporation did not pay in previous years
d) to receive a higher or lower dividend yield depending on current competitive market conditions

Answer 1

d) to receive a higher or lower dividend yield depending on current competitive market conditions

Step-by-step explanation:

The floating rate feature on preferred stock allows the shareholders to receive a higher or lower dividend yield depending on current competitive market conditions. The reason is the dividend on preferred stock varies with change in market rates.