Which of the following statements is incorrect?
A) Mandatory redeemable preferred stock should be valued as a perpetual security.
B) The trigger on the repurchase of mandatory redeemable preferred stock by the issuer is sometimes a specific date.
C) The trigger on the repurchase of mandatory redeemable preferred stock by the issuer is sometimes an event like a merger.
D) Financial institutions have increasingly used mandatory redeemable preferred stock because it is considered equity capital for regulatory purposes.

Question

Quizplus · Accepted Answer

Mandatory redeemable preferred stock is not valued as a perpetual security because it has a fixed redemption date or event when the issuer must repurchase the stock. This characteristic differentiates it from perpetual securities, which do not have a maturity date.

Which of the Following Statements Is Incorrect