Common stockholders expect greater returns than bondholders because:
A) they have no legal right to receive dividends.
B) they bear greater risk.
C) in the event of liquidation, they are only entitled to receive any cash that is left after all creditors are paid.
D) all of the above.
An decrease in the ________ will increase the value of preferred stock.
A) expected rate of return
B) life of the investment
C) dividend paid
D) both A and C
Changes in the general economy, such as changes in interest rates or tax laws, represent what type of risk?
A) Firm-specific risk
B) Market risk
C) Unsystematic risk
D) Diversifiable risk
Which of the following is NOT an example of systematic risk?
A) Inflation
B) Recession
C) Management risk
D) Interest rate risk