Which of the Following Statements About Preferred Stock Is True

question 17

Multiple Choice

Which of the following statements about preferred stock is true?

• A) Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.
• B) Unpaid dividends on preferred stock are a debt of the corporation.
• C) If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.
• D) There is no difference in the voting rights of preferred and common stockholders.
• E) None of these.

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Definitions:

Confederate Currency

The currency issued by the Confederate States of America during the American Civil War, now considered a collectible item.

Market Price

The prevailing rate at which a good or service is available for purchase or sale in the public market.

Inelastic

A characteristic of demand or supply that signifies a limited response to changes in prices or other economic factors.

Unit Elastic

A situation where a percentage change in the price of a good results in an equal percentage change in the quantity demanded.