Equity security that has a senior claim to the firm's earnings and assets over common stock.

Question

Quizplus · Accepted Answer

Preferred stock has a senior claim to the firm's earnings and assets over common stock. Cumulative preferred stock also has a senior claim and accumulates unpaid dividends, but this is not guaranteed for all types of preferred stock. Special stock is not a commonly used term in finance. Common stock has a junior claim to earnings and assets compared to preferred stock.

Equity Security That Has a Senior Claim to the Firm's