Which of the Following Is NOT a Characteristic of Preferred

question 24

Multiple Choice

Which of the following is NOT a characteristic of preferred stock as an investment?

• A)Preferred stockholders are entitled to receive their dividend prior to payment of dividends to common stockholders
• B)Preferred stock dividends are taxed at the capital gains rate for individual investors
• C)Preferred stock dividends may be omitted by the corporation under certain circumstances
• D)It is a hybrid security of common stock and debt

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Definitions:

Mortgagee

The lender in a mortgage agreement, typically a bank or financial institution, which has the right to repossession if the borrower defaults.

Court

A government institution with the authority to adjudicate legal disputes between parties and administer justice in civil, criminal, and administrative matters.

Principal

The person who authorizes an agent to represent him or her.

Life Estate

A legal right to use and derive benefits from a property for the duration of one's life, after which the property passes to another designated person.