What is the significance of the name preferred stock?
A) It is the type of stock that most investors would rather have.
B) Its claims on dividends are paid before those of ordinary share.
C) The overall return on preferred stock is higher than that on ordinary share.
D) This stock is available only to select individuals associated with the company.
E) This stock provides the most powerful voting rights.

Question

Quizplus · Accepted Answer

The name "preferred stock" implies that it has a higher priority or preference when it comes to dividends. Preferred stockholders are paid their dividends before common stockholders receive any payment.

What Is the Significance of the Name Preferred Stock