Alto Company issued 7% preferred stock with a $100 par value. This means that:

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The 7% refers to the annual dividend payment that a preferred shareholder will receive based on the $100 par value. This means that the potential dividend per preferred share is $7 per year. The market price per share may vary and is not necessarily equal to $100 per share. The 7% does not necessarily mean that preferred shareholders are entitled to 7% of the annual income, as the company may have other classes of stock or other expenses to consider. While preferred shareholders may have a guaranteed dividend, it is not always the case as companies may suspend or reduce dividends. The statement "Only 7% of the total paid-in capital can be preferred stock" is not true, as companies can issue more or less than 7% of their capital as preferred stock.

Alto Company Issued 7% Preferred Stock with a $100 Par