Which of the following is not true about Preferred Stock?

Multiple Choice

• It typically pays a dividend that never changes.

• Preferred stock holders are ahead of bondholders in line to receive assets following a liquidation.

• Any missed dividends must be paid in full before a company can make dividend payments to holders of common stock.

• Its valuation can be determined by using the formula to value perpetuities.

• Not every company issues preferred stock.

Which of the following is NOT true about bonds?

Multiple Choice

• Interest payments are at least partially tax deductible to the issuing corporation.

• Bondholders are ahead of stockholders in terms of claims on the companys assets should the firm go into bankruptcy.

• Bondholders have a vote in electing Directors to the Board.

• Bondholders are entitled to receive the face (par) value of the bond if they hold it on the maturity date.

• Owning a bond does not give the holder an ownership stake in the company.