Which of the Following Statements Is CORRECT

question 60

Multiple Choice

Which of the following statements is CORRECT?

• A) The preferred stock of a given firm is generally less risky to investors than the same firm's common stock.
• B) Corporations cannot buy the preferred stocks of other corporations.
• C) Preferred dividends are not generally cumulative.
• D) A big advantage of preferred stock is that dividends on preferred stocks are tax deductible by the issuing corporation.
• E) Preferred stockholders have a priority over bondholders in the event of bankruptcy to the income, but not to the proceeds in a liquidation.

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