Which of the Following Is Not True with Respect to Preferred

question 29

Multiple Choice

Which of the following is not true with respect to preferred stock?

• A) Preferred stock usually does not allow for significant voting rights.
• B) If the firm does not have sufficient earnings from which to pay the preferred stock dividends, the preferred shareholders may force the firm into bankruptcy.
• C) Normally, the owners of preferred stock do not participate in the profits of the firm beyond the stated fixed annual dividend.
• D) Payment of preferred dividends is not a tax-deductible expense.
• E) All of the above are true.

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Definitions:

Escrow Company

A neutral third-party entity that holds assets, including money, property, and documents, on behalf of other parties during the completion of a transaction.

Financing Statement

A document filed to give public notice of a secured transaction, indicating an interest in the assets of a debtor.

Collateral

Collateral offered to secure a loan, subject to seizure upon default.

Collection Agency

An organization employed by creditors to collect funds that are owed by individuals or businesses, usually when those debts are past due.