Final answer:
The claim that Dutch Auction preferred stocks are typically short-term instruments is false. A Dutch Auction is simply a method of issuing securities and does not define the term of the investment for preferred stocks.
Step-by-step explanation:
Dutch Auction preferred stocks are typically used as short-term instruments, unlike standard preferred stocks.
With a Dutch Auction, the issuer sets a range of prices at which investors can submit bids. The auction determines the stock price based on the bids received. This mechanism is commonly used for initial public offerings (IPOs) to help determine the fair market value of the stock.
The statement that Dutch Auction preferred stocks are typically used as short-term instruments is false. Dutch Auction preferred stocks are not a distinct class of preferred stocks but rather a method of issuing securities, including preferred stocks. A Dutch Auction is a process where the price of an offering is determined after taking in all bids to ascertain the highest price at which the total offering can be sold. This method could be used for various types of securities and does not imply that the preferred stocks issued through a Dutch Auction are intended for short-term use. In contrast, standard preferred stocks are typically issued with a fixed dividend and are considered long-term investment instruments.