The Main Difference(s) Between a Preferred Stock in Company a That

question 5

Multiple Choice

The main difference(s) between a preferred stock in Company A that pays a $2.50 per share annual dividend and a common stock in Company A that also pays a $2.50 per share current annual dividend is (are)

• A) the common stock has potential for price appreciation due to company earnings growth.
• B) the common stock dividend may increase but the preferred dividend is generally fixed.
• C) the common stock could lose value if the company performance were to suffer.
• D) All of the above are real differences between preferred and common stock in the same company.

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Definitions:

Marketable

Refers to the ability of a product or service to be desired or bought by consumers due to its value, quality, or some other desirable attribute.

Differentiable

Having distinguishing characteristics that allow a product, service, or brand to stand out from its competitors.

Accessible

The quality of being easily reached, entered, used, or understood by people, including those with disabilities.

Repositioning

The act of reestablishing a product’s position in response to changes in the marketplace.