Which of the Following Statements About Preferred Stock Is False

question 34

Multiple Choice

Which of the following statements about preferred stock is false?

• A) Preferred stock has a higher-priority claim on the firm's assets than common stock.
• B) Failure to pay dividends will result in default.
• C) Preferred stock has a lower-priority claim on the firm's assets than the firm's creditors in the event of default.
• D) Preferred stock typically pays a fixed dividend.

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Definitions:

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level and in a given time period.

Keynesians

Economists who follow the theories of John Maynard Keynes, emphasizing the need for government intervention to manage economic cycles.

Supply-Siders

Economics theorists who believe that reducing tax rates and deregulation can stimulate economic growth by increasing supply.

Marginal Tax Rates

The rate at which an additional dollar of income is taxed, indicating the tax impact on your next dollar earned.