Which of the Following Is Not Correct Regarding Preferred Stock

question 24

Multiple Choice

Which of the following is not correct regarding preferred stock?

• A) Preferred stocks are considered to be safer investments than common stocks.
• B) Owners of preferred stock have first claim to a corporation's assets after creditors in a bankruptcy.
• C) Owners of preferred stock receive cash dividends before common stockholders receive their dividends.
• D) The dollar amount of the dividend on preferred stock is known before the stock is purchased.
• E) The yield on preferred stocks is often much higher than the yield on bonds.

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Definitions:

Cash Flow Statement

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Accounting Equation

The accounting equation is a fundamental principle of accounting that states that assets equal liabilities plus equity; it forms the basis for double-entry bookkeeping.

Owners' Equity

Represents the amount of capital that the owners or shareholders have in the company after deducting liabilities from assets.

Assets

Resources owned by a business or individual, considered valuable because they can be used to produce goods, services, or generate revenue.