Preferred stockholders give up their right to receive profits in exchange for the right to vote for the corporation's directors.

Question

Quizplus · Accepted Answer

Preferred stockholders do not necessarily give up their right to receive profits in exchange for their voting rights. In fact, preferred stockholders usually receive a fixed dividend payment before any dividends are distributed to common stockholders. Preferred stockholders may or may not have voting rights, depending on the terms of the stock issuance.

Preferred Stockholders Give Up Their Right to Receive Profits in Exchange