Though They Are Classified as Equity, Why Are Preferred Shares

question 41

Multiple Choice

Though they are classified as equity, why are preferred shares also similar to debt?

• A)Both carry the same interest rate.
• B)Dividends on preferred shares must be paid out before any common share dividends.
• C)The voting structures for preferred shares and debt are equivalent.
• D)Preferred shares have similar maturity structures to debt.

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Definitions:

Coracoid Process

A small hook-like structure on the lateral edge of the superior anterior portion of the scapula (shoulder blade).

Acromial End

This refers to the lateral end of the clavicle that articulates with the acromion of the scapula.

Intercondylar Fossa

A deep notch located between the condyles of the femur, playing a key role in knee joint stability.

Medial Condyle

The inner rounded protrusion at the end of some bones, such as the femur, which forms part of the knee joint.