Josef owns some stock in the Eck-Witty Corporation, while Sharon owns a bond in the same company. Eck-Witty must pay a dividend to Josef before it can pay any interest to Sharon.

Question

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Dividends are paid to shareholders out of the company's profits, while bond interest is a fixed payment obligation. Companies must pay bond interest before they can distribute dividends to shareholders.

Josef Owns Some Stock in the Eck-Witty Corporation, While Sharon