Which of the Following Is an Advantage of Preferred Stock

question 31

Multiple Choice

Which of the following is an advantage of preferred stock?

• A) Preferred shareholders are guaranteed that they will not take a loss on their investment.
• B) Preferred shareholders have higher voting rights than common shareholders.
• C) Preferred shareholders may sell their shares for a price higher than that of common stock.
• D) Preferred shareholders have the first claim on dividend funds.

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Definitions:

Marginal Costs

The additional cost incurred from producing one more unit of a product or service.

Fixed Costs

Expenses that do not fluctuate with changes in production level or sales volume, such as rent or salaries.

Short Run

A period in economic analysis during which some factors of production are fixed, affecting production and cost decisions.

Average Variable Costs

The total variable costs (costs that vary with the level of output) divided by the quantity of output produced.