Which of the Following Statements About Preferred Stock Is True

question 17

Multiple Choice

Which of the following statements about preferred stock is true?

• A) Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.
• B) Unpaid dividends on preferred stock are a debt of the corporation.
• C) If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.
• D) There is no difference in the voting rights of preferred and common stockholders.
• E) None of these.

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Definitions:

Simplify

To alter a mathematical expression or equation to make it easier to understand or work with by reducing it to its most basic form.

Multiply

The mathematical operation of repeated addition of a number by itself a specified number of times.

Simplify

The process of reducing an expression to its simplest form.

Average Cost

The total cost of production divided by the number of goods produced.