Which One of the Following Statements Is Correct

question 48

Multiple Choice

Which one of the following statements is correct?

• A) Common stock dividends cannot be paid if preferred stock dividends are in arrears.
• B) Preferred stock dividends cannot be paid if common stock dividends are in arrears.
• C) Common and preferred dividends must be paid simultaneously.
• D) No dividends on the common stock can be paid without specific shareholder approval.

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Definitions:

Understand

To grasp the meaning, significance, or nature of something.

Problem

An issue or situation that presents difficulty and requires a solution.

Principle of Rights Theory

A normative theory that emphasizes the rights of individuals and the duties others have to respect those rights.

Rights

Legal, social, or ethical principles of freedom or entitlement; the fundamental norms concerning what people are allowed to do.