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Question(s) / Instruction(s):

A company issued 7% preferred stock with a $100 par value. This means that:

a)            Preferred shareholders are entitled to 7% of the annual income.

b)            The market price per share will approximate $100 per share.

c)            Only 7% of the total paid-in capital can be preferred stock.

d)            Preferred shareholders have a guaranteed dividend.

e)            The amount of the potential dividend is $7 per year per preferred share.

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