Which of the Following Statements About Preferred Stock Is True

question 4

Multiple Choice

Which of the following statements about preferred stock is true?

• A)Preferred shareholders generally get enhanced voting rights.
• B)Dividends must generally be paid to preferred shareholders before dividends may be paid to common shareholders.
• C)Preferred stocks are a hybrid between equity and debt, because like common stock the owners of preferred shares can vote and like debt they are paid interest.
• D)It would be foolish to purchase the common stock of a company that also issues preferred shares, because the preferred shares have a higher yield with a stronger guarantee.
• E)None of the above are true.

---

Definitions:

Financial Information

Data related to the financial status of a company, including income statements, balance sheets, and cash flow statements.

Decision

The process of making choices or identifying a course of action from several alternatives, often based on information or data analysis.

Relevant

Pertinent or related to the matter at hand, especially in the context of decision-making.

Proprietorship Form

A business organization that is owned and operated by an individual, where there is no legal difference between the owner and the business.