Preferred stock ________.
A)reflects residual ownership of a company
B)represents a preferential claim on dividends
C)will be "paid" before the bondholders
D)always has a legal and specific claim to a fixed amount (listed as a liability)

Question

Quizplus · Accepted Answer

Preferred stock represents a preferential claim on dividends, meaning that it has priority over common stockholders but is subordinate to bondholders. It does not reflect residual ownership of a company, as that is the role of common stock. While preferred stock may have a fixed amount, it is not listed as a liability and does not always have a legal and specific claim to that amount.

Preferred Stock ________