Which of the Following Is Not True

question 71

Multiple Choice

Which of the following is not true?

• A)Owners of preferred stock have a claim on the assets of a firm that is senior to the claim of common shareholders.
• B)Preferred shares carry special rights.
• C)The senior status and special rights may induce certain investors to purchase preferred shares of a firm, even though they would be unwilling to purchase common shares of the same firm.
• D)The senior status and special rights decrease the risks of preferred shareholders relative to common shareholders.
• E)Jurisdictional laws dictate the rights and obligations of the issuing firm and of the investor in the preferred shares.

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