A Dividend Preference for Preferred Stock Means That

question 160

Multiple Choice

A dividend preference for preferred stock means that:

• A)Preferred stockholders receive their dividends before common shareholders.
• B)Preferred shareholders are guaranteed dividends.
• C)Dividends are paid quarterly.
• D)Preferred stockholders prefer dividends more than common stockholders.
• E)Dividends must be declared on preferred stock.

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Definitions:

Total Cost Curve

A graphical representation showing the total cost incurred by a firm in the production of goods or services at different levels of output.

Quantity

The volume of a physical or non-physical item or service.

Economies Of Scale

Economies of scale are cost advantages reaped by companies when production becomes efficient, leading to a reduction in the per-unit cost as the scale of operations increases.

Fixed Cost

A cost that does not change with an increase or decrease in the number of goods or services produced or sold.