Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

The cost of preferred stock is equivalent to the:

Dividend payout ratio

Interest rate on long-term debt

Earnings per share divided by the book value per share

Dividend rate divided by the market price per share

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Verified step by step guidance

Understand the concept of preferred stock: Preferred stock is a type of equity that typically pays a fixed dividend to shareholders, and its cost represents the return required by investors to hold this stock.

Identify the formula for the cost of preferred stock: The cost of preferred stock is calculated as the dividend rate divided by the market price per share. This formula reflects the yield investors expect from their investment in preferred stock.

Break down the components of the formula: The dividend rate is the annual dividend paid per share, and the market price per share is the current trading price of the preferred stock in the market.

Apply the formula: To calculate the cost of preferred stock, divide the annual dividend rate (expressed as a monetary value or percentage) by the market price per share. Use the formula:

\frac{Dividend Rate}{Market Price Per Share}

Interpret the result: The outcome represents the cost of preferred stock as a percentage, which indicates the return investors require to invest in the preferred stock.