Preferred Stock Is Preferred by Investors as Compared to Common

question 44

Multiple Choice

Preferred stock is preferred by investors as compared to common stock because

• A) it pays higher dividends than common.
• B) it has advantages of special rights to dividends and/or asset claims during liquidation.
• C) preferred stock pays dividends and common stock pays interest.
• D) dividends are expected to grow exponentially.

---

Definitions:

Treasury Stock

Shares of a company's own stock that have been reacquired by the company and held in its treasury.

Issued

When a company distributes or sells new securities, shares, or other financial instruments to investors.

Reacquired

Refers to assets, often shares, that a company buys back from investors or stakeholders.

Par Value

The stated or principal value of a stock or bond as declared by the issuer.