Which of the following statements concerning preferred stocks is true?
A) Preferred stockholders have a prior claim on the income and assets of the firm as compared to the claims of lenders.
B) Preferred stock dividends per share are normally increased as the earnings of the firm increase.
C) Preferred dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems.
D) The par value of a stock is always the same as the initial selling price.

Question

Quizplus · Accepted Answer

Preferred stock dividends are usually fixed and do not change based on the earnings of the firm. Additionally, preferred stockholders typically have a prior claim on the income and assets of the firm compared to common stockholders but not over the claims of lenders. The par value of a stock may or may not be the same as the initial selling price.

Which of the Following Statements Concerning Preferred Stocks Is True