Preferred stockholders receive dividends before dividends are paid to common stockholders.

Name: Preferred stockholders receive dividends before dividends are paid to common stockholders.
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Question

Quizplus · Accepted Answer

Preferred stock is called "preferred" for a reason - it has priority over common stock when it comes to receiving dividends. Preferred stockholders are usually guaranteed a fixed dividend rate, and they must be paid before any dividends are paid to common stockholders.

Preferred Stockholders Receive Dividends Before Dividends Are Paid to Common