Preferred stock carries priority over common stock ______.Multiple choice question.only when a corporation is liquidatedboth for dividends and at liquidationonly when dividends are declared and paid
Question
Preferred stock carries priority over common stock ______.Multiple choice question.only when a corporation is liquidatedboth for dividends and at liquidationonly when dividends are declared and paid
Solution
The correct answer is "both for dividends and at liquidation". Preferred stock has priority over common stock both in terms of dividend payments and in the event of the company's liquidation. This means that if a company decides to pay dividends, preferred shareholders are paid first before common shareholders. Similarly, if a company is liquidated, preferred shareholders have a higher claim on the company's assets and earnings.
Similar Questions
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