Preferred Stockholders Have Priority Over Common Stockholders with Respect to Dividends

question 2

True/False

Preferred stockholders have priority over common stockholders with respect to dividends, because dividends must be paid on preferred stock before they can be paid on common stock.However, preferred and common stockholders normally have equal priority with respect to liquidating proceeds in the event of bankruptcy.

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Definitions:

John Locke

A 17th-century English philosopher known for his work on political philosophy and epistemology, emphasizing natural rights and the social contract.

Jean-Jacques Rousseau

An 18th-century philosopher, writer, and composer, known for his influential works on education, political philosophy, and the social contract.

Jean Piaget

A pivotal figure in developmental psychology who introduced the concept that children progress through a series of cognitive developmental stages.

Hypotheses

Possible explanations for phenomena, used to predict the outcome of research.