Which of the following statements is true?
A)Preferred shares are usually a more risky investment than common shares.
B)Convertible preferred shares are exchangeable for a set number of common shares at the option of the investor at some specified date after the shares have been issued.
C)Callable preferred shares can be exchanged for a designated cash value at the option of the investor.
D)Preferred shares typically increase significantly in value over time.

Question

Quizplus · Accepted Answer

Convertible preferred shares can be exchanged for a set number of common shares at the option of the investor at some specified date after the shares have been issued. This statement is true. A is incorrect because common shares are generally considered to be more risky than preferred shares. C is incorrect because callable preferred shares are typically redeemed by the issuer at a predetermined price, not at the option of the investor. D is incorrect because the value of preferred shares can fluctuate and may not necessarily increase significantly over time.

Which of the Following Statements Is True