For an investor’s perspective, preference shareholders hold _______risk than common shareholders. However, preference shares are _____ to hold than the firm’s bonds.

For an investor’s perspective, preference shareholders hold ___risk than common shareholders. However, preference shares are _ to hold than the firm’s bonds.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 9MC

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Concept explainers

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.

Question

For an investor’s perspective, preference shareholders hold _______risk than common shareholders. However, preference shares are _____ to hold than the firm’s bonds.

Question 46 options:

1)	higher, riskier

2)	higher, less risky

3)	lower, riskier

4)	lower, less risky

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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