Which of the Following Is Usually a Right of a Preferred

question 91

Multiple Choice

Which of the following is usually a right of a preferred stockholder?

• A) right to convert shares to common stock on demand
• B) preemptive right to participate in the issuance of new common shares
• C) right to receive dividend payments before any dividends are paid to common stockholders
• D) right to sue company in bankruptcy proceedings if promised preferred dividends are not paid

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Definitions:

Net Cash Flow

The difference between a company's cash inflows and outflows in a given period.

Tax Rate

The percentage at which income or financial transactions are taxed by a government.

Cash Inflows

Money received by a business from its various activities, like sale of goods, services, or obtaining a loan.

Cash Outflows

The movement of money out of a business as expenditures, payments, or investments, which reduce the company's cash balance.