Which of the Following Statements Is True About Preferred Stock

question 25

Multiple Choice

Which of the following statements is true about preferred stock?

• A) Preferred shareholder dividends must normally be paid before common shareholder dividends.
• B) Preferred stock is always a better investment than common stock.
• C) If a Board of Directors decides not to pay any dividends in a year, the preferred shareholders can have a court declare the company to be bankrupt.
• D) Preferred shareholders always have better voting rights than common shareholders.

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Definitions:

Directional

In statistics, directional indicates that a hypothesis specifies the direction of an expected difference or relationship.

Alternative Hypothesis

In statistical testing, the hypothesis that proposes there is a statistically significant relationship or difference between two variables, as opposed to the null hypothesis.

Standard Deviations

A measure that quantifies the amount of variation or dispersion of a set of data values from the mean.

Standard Error

The standard deviation of the sample mean distribution, often used to estimate the accuracy of the sample mean compared to the population mean.