A share of noncallable preferred stock has a par value of $100 and pays 7 percent annual interest. Which of the following statements is true?
A) The stock will pay $7 per year as long as the company is in existence.
B) The stock will pay $7 in the first year, but the amount paid in future years will depend on what happens to interest rates in the future.
C) The stock will pay $100 per year for 20 years.
D) The stock will pay $7 per year and will pay the investors back the $100 par value at maturity.
Correct Answer:
Verified
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