Operating leases often have terms that include:

Operating leases often have terms that include:

Operating leases often have terms that include:

maintenance of the equipment by the lessor.

full amortization over the life of the lease.

very high penalties if the lease is cancelled.

restrictions on how much the leased property can be used.

much longer lease periods than for most financial leases.

Which of the following statements is most CORRECT?

A.Preferred stock generally has a higher component cost of capital to the firm than does common stock.

B.   By law in most states, all preferred stock must be cumulative, meaning that the compounded total of all unpaid preferred dividends must be paid before any dividends can be paid on the firm’s common stock.

C.  From the issuer’s point of view, preferred stock is less risky than bonds.

D.  Whereas common stock has an indefinite life, preferred stocks always have a specific maturity date, generally 25 years or less.

E.  Unlike bonds, preferred stock cannot have a convertible feature.