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Assume that you have decided to invest a portion of your money in the stock market. You ask your broker to recommend several preferred stocks for you to consider as an investment. Your broker recommends the following two companies. Both are start-up corporations, but you agree with your broker that both have excellent potential for the future.

Company A: Noncumulative, nonparticipating, preferred stock with a $4-per-year dividend rate. Each share of this stock will cost you $20.

Company B: Cumulative, nonparticipating, preferred stock with a $4-per-year dividend rate. Each share of this stock will cost you $25.

You have decided to invest in only one of the companies. State which company you would choose and why.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9962862

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