The Owner of Preferred Stock

question 195

Multiple Choice

The owner of preferred stock:

• A) Is entitled to a distribution of income prior to the common shareholders.
• B) Has the right to veto the outcome of an election held by the common shareholders.
• C) Has the right to declare the company bankrupt whenever there are insufficient funds to pay dividends to the common shareholders.
• D) Receives tax-free dividends if it is an individual and own more than 20% of the outstanding preferred shares.
• E) Has the right to collect payment on any unpaid dividends as long as the stock is noncumulative preferred.