Preferred stock exhibits some of the characteristics of long-term debt in that its dividend is generally constant and preferred stockholders are paid before common shareholders in the event the firm is liquidated.

Question

Quizplus · Accepted Answer

Preferred stock does have a fixed dividend and preferred stockholders have priority in receiving dividends and in the event of liquidation, similar to long-term debt.

Preferred Stock Exhibits Some of the Characteristics of Long-Term Debt