Which of the following is NOT one of the many differences between long-term debt and preferred stock?
A) Long-term debt pays interest, which is tax-deductible to the borrower.
B) Preferred stockholders are paid before creditors if the company bankrupts.
C) Preferred stockholders are considered non-voting owners of the company.
D) The firm is not legally required to pay preferred stock dividends but must pay interest to creditors.

Question

Quizplus · Accepted Answer

This statement is incorrect as creditors have priority over preferred stockholders in case of a company going bankrupt. The correct statement is that preferred stockholders are paid before common stockholders but after creditors.

Which of the Following Is NOT One of the Many