The holder of preferred stock is entitled to a constant dividend ________.
A)every period
B)only when earnings are positive
C)only when the stock price increases
D)only when earnings are positive and only when the stock price increases

Question

Quizplus · Accepted Answer

A holder of preferred stock is entitled to a constant dividend every period, regardless of whether earnings are positive or the stock price increases. This is one of the features that distinguishes preferred stock from common stock, where dividends are paid at the discretion of the company and can vary from period to period.

The Holder of Preferred Stock Is Entitled to a Constant