Preferred stock differs from common stock in that:
A)preferred stock has more voting power and,as such,greater control over the management of the company.
B)preferred stockholders are paid dividends before common stockholders.
C)preferred stock pays tax-free dividends.
D)preferred stock has no preemptive rights or residual claims.

Question

Quizplus · Accepted Answer

Preferred stockholders have higher priority than common stockholders if a corporation distributes assets to its owners through dividends or at liquidation.That is,any dividends the corporation declares must be paid to preferred stockholders before they can be paid to common stockholders.

Preferred Stock Differs from Common Stock in That