Which of the following features (if any) of preferred stock provides the investor with a measure of protection against inflation?
A)adjustable dividend rate
B)cumulative feature
C)call feature
D)after-tax cost

Question

Quizplus · Accepted Answer

An adjustable dividend rate provides the investor with a measure of protection against inflation as the dividend rate can be increased to keep up with inflation. Cumulative feature means if a company skips the dividend payment in one quarter, the preferred stockholder will receive the payment and after-tax cost is about the tax paid on dividends. A call feature is the right of the issuer to redeem the stock before its maturity. None of these features provide protection against inflation.

Which of the Following Features (If Any) of Preferred Stock