As a preferred stockholder, you are entitled to numerous preferences and privileges over common stockholders. If you are a preferred stockholder of a company that has fallen on economic hardship and is likely to go bankrupt, which preference or privilege of preferred stock is going to be most useful to you?

Question

Quizplus · Accepted Answer

Asset distribution preference is most useful in the event of bankruptcy because it ensures that preferred stockholders are paid before common stockholders when the company's assets are liquidated. This can provide a level of financial protection not available to common stockholders.

As a Preferred Stockholder, You Are Entitled to Numerous Preferences