Which of the Following Is True of Preferred Stock

question 11

Multiple Choice

Which of the following is true of preferred stock?

• A)Preferred shareholders generally receive a fixed amount of dividends before common stockholders do.
• B)Preferred shareholders are guaranteed that they will not take a loss on their investment.
• C)Preferred shareholders have higher voting rights than common shareholders.
• D)Preferred shareholders may sell their shares for a price higher than that of common stock.

---

Definitions:

Outstanding Balance

The outstanding balance is the amount of debt, or loan, that remains to be paid off.

Cash Flows

A reiteration emphasizing on multiple streams or instances of money being transferred into and out of a business or investment.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Trial-And-Error

A method of problem-solving that involves testing various methods of achieving an outcome until a satisfactory solution is found.