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Which statement describes the relationship of the par value to the fair value of a stock?
The par value is more than the fair value of a stock.
The par value is less than the fair value of a stock.
The par value is equal to the fair value of a stock.
The par value is unrelated to the fair value of a stock.
A company reports $3,000,000 of convertible preferred stock on its balance sheet. What would an investor conclude about this stock?
It can be exchanged for like shares of common stock at the company's option.
It is less valuable than common stock.
It can be exchanged for common stock at a predetermined ratio at the stockholder's option.
It can be exchanged for bonds at a predetermined ratio at the stockholder's option.
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