Which of the Following Statements About Preferred Stock Is True

question 4

Multiple Choice

Which of the following statements about preferred stock is true?

• A)Preferred shareholders generally get enhanced voting rights.
• B)Dividends must generally be paid to preferred shareholders before dividends may be paid to common shareholders.
• C)Preferred stocks are a hybrid between equity and debt, because like common stock the owners of preferred shares can vote and like debt they are paid interest.
• D)It would be foolish to purchase the common stock of a company that also issues preferred shares, because the preferred shares have a higher yield with a stronger guarantee.
• E)None of the above are true.

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Definitions:

Pluton

A body of intrusive igneous rock that solidified below the surface of the earth.

Shear Zone

A region of the Earth's crust where rocks have been deformed by shear stress, leading to the alteration of their structure and the development of foliation.

Supercontinent

A large landmass that includes more than one continental core, which in Earth's history has periodically merged and then broken apart.

Gondwana

Name given by geologists to the hypothetical combination of the southern continents into a single large supercontinent.