Which of the Following Statements Is CORRECT

question 59

Multiple Choice

Which of the following statements is CORRECT?

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

---

Definitions:

Cost Center

A department or unit within an organization that does not directly add to profit but still incurs costs, such as HR or IT department.

Service Departments

Units within a company that provide support services to other departments but do not directly generate revenue.

Operating Departments

Divisions or units within an organization directly involved in its core business activities, responsible for producing the goods or services it offers.

Income Statements

Reports that detail the revenue, expenses, and profitability of a company over a defined accounting period, showing its financial performance.