The amount of preferred stock dividends that must be paid each year may be stated in dollars (i.e., x-dollar preferred stock) or as a percentage of the firm's earnings (i.e., x-percent preferred stock).

Question

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Preferred stock dividends are typically stated as a fixed dollar amount per share or as a percentage of the par value of the stock, not as a percentage of the firm's earnings.

The Amount of Preferred Stock Dividends That Must Be Paid