Which of the Following Is True

question 22

Multiple Choice

Which of the following is true?

• A) If a company files for bankruptcy, preferred stockholders' claims are paid prior to creditors' claims.
• B) If a company files for bankruptcy, preferred stockholders' claims are paid prior to common stockholders' claims.
• C) In the event of bankruptcy and subsequent liquidation, preferred stockholders only receive funds after creditors and common stockholders.
• D) Both (a) and (b)
• E) None of the above

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Definitions:

Over-The-Counter Markets

A decentralized market where securities are traded directly between parties without the supervision of an exchange, often involving smaller, less conventional companies.

Stock Exchanges

Marketplaces where securities, such as stocks and bonds, are bought and sold by participants.