Characteristics of preferred stock that indicate it is a hybrid security most likely include:

a. Representation of ownership interest.

b. Guaranteed dividend payments.

c. Premiums attached to its par value.

d. Payment of interest.

Free cash flow to equity in the current year will most likely increase when a firm:

a. Has substantial capital expenditures.

b. Issues bonds.

c. Increases its investment in net working capital.

d. Experiences a decline in net income.