Which of the Following Is True of Preferred Stock

question 75

Multiple Choice

Which of the following is true of preferred stock?

• A) It has features of bonds and a common stock.
• B) It has a claim on assets prior to creditors in the event of liquidation.
• C) Its dividends can be paid only after paying dividends to the common stockholders.
• D) It usually has a maturity of thirty years.

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Definitions:

Accounts Payable

Short-term liabilities owed to suppliers or creditors for goods and services received but not yet paid for.

Financing Activities

Refers to the transactions and events through which a business raises funds to operate and expand, including issuing shares, taking on loans, or issuing bonds.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the balance sheet.

Bonds Payable

A financial obligation represented by a bond issued by a company, promising to pay back with interest the borrowed funds.