Question

multiple choice question

a share of stock that has a dividend rate specified on it must be ______

• preferred stock
• treasury stock
• either preferred or common stock
• common stock

Explanation:

Analyze the definition of a specified dividend rate

A share of stock with a predetermined, specified dividend rate (either as a fixed percentage of par value or a flat dollar amount) is a defining characteristic of preferred stock.

Evaluate the options

• preferred stock: Correct. Preferred dividends are typically stated as a fixed percentage of par value or a fixed dollar amount per share.
• treasury stock: Incorrect. Treasury stock represents shares repurchased by the issuing corporation and does not receive dividends.
• either preferred or common stock: Incorrect. Common stock dividends are variable, discretionary, and not specified as a fixed rate on the stock certificate.
• common stock: Incorrect. Common stock has no pre-specified dividend rate.

Answer:

• preferred stock (Correct answer)
• treasury stock
• either preferred or common stock
• common stock