Many preferred stocks have a feature that requires a firm to periodically set aside an amount of money for the retirement of its preferred stock.What is the name of this feature?

Question

Quizplus · Accepted Answer

The feature that requires a firm to periodically set aside an amount of money for the retirement of its preferred stock is known as a sinking fund. Choice A (Convertible) refers to the option for preferred stockholders to convert their shares into common stocks, while choice B (Callable) indicates the ability of the issuer to redeem the preferred shares before maturity. Choice C (Cumulative) refers to the requirement for the issuer to pay any missed dividends on preferred shares before paying common stock dividends.

Many Preferred Stocks Have a Feature That Requires a Firm