6 November, 23:04

# Alto Company issued 7% preferred stock with a \$100 par value. This means that:A. The market price per share will approximate \$100 per share.B. Preferred shareholders are entitled to 7% of the annual income.C. The amount of the potential dividend is \$7 per year per preferred share.D. Only 7% of the total paid-in capital can be preferred stock.E. Preferred shareholders have a guaranteed dividend.

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1. 6 November, 23:23
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Option "C" is the correct answer to the following question.

Explanation:

Given:

Issue price of share = \$100

Market price per share = \$100

Preferred stock dividend rate = 7%

Computation of dividend per year:

Dividend per year = Issue price of share * Preferred stock dividend rate

Dividend per year = \$100 * 7%

Dividend per year = \$7

Dividends are always paid to preferred stock at fixed rates at face value.
2. 7 November, 01:26
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Answer: C. The amount of the potential dividend is \$7 per year per preferred share.

Explanation:

A Preferred Share gives the holder the right to earn a fixed dividend from a company. The fixed dividend is a percentage of the par value of the Preferred stock and it is stated when issued.