Problem
The Coca-Cola company just paid out cash dividends of $0.57 per share for the common stock shareholders in the first quarter of 2022. Which one of the following regarding dividends is correct?
Coca-Cola's bondholders and preferred stockholders are also entitled to dividends.
Coca-Cola's dividend payment is approved by its board of directors
Coca-Cola can treat dividends as tax-deductible expense
If Coca-Cola falls to pay dividends in the rest quarters of 2022, it is considered an event of default
In a recent Interview, Warrant Buffett commented on Berkshire Hathaway's investment in Occidental Petroleum Corp's preferred stock, specifically on its high dividends yield. Occidental Petroleum offers preferred stock which is referred to as 10-10 stock, meaning that this stock will pay a dividend yield of 10% on a par value of $100 per share starting 10 years from now. What is this stock worth preferred stock shareholders today if they require a rate of return of 6.25%?