Hardy Lumber has a capital structure that includes bonds, preferred stock, and common stock. Which one of the following rights is most apt to be granted to the preferred shareholders?
A) Right to share in company profits prior to other shareholders
B) Right to elect the corporate directors
C) Right to vote on proposed mergers
D) Right to all residual income after the common dividends have been paid
E) Right to a permanent seat on the board of directors

Question

Quizplus · Accepted Answer

Preferred shareholders typically have a higher priority claim on company assets and earnings than common shareholders. This means that they are more likely to have the right to share in company profits prior to other shareholders.

Hardy Lumber Has a Capital Structure That Includes Bonds, Preferred