Preferred stock dividends:
A) have preference over bond interest payments.
B) are guaranteed to be paid at least annually.
C) are excluded from the taxable income of their recipients.
D) have priority over common stock dividends.

Question

Quizplus · Accepted Answer

Preferred stock dividends have priority over common stock dividends. They are paid before any dividends can be paid to holders of common stock. However, preferred stock dividends are not guaranteed and may be reduced or suspended by the issuer under certain circumstances. They are also taxable income for the recipient. Preferred stock dividends do not have preference over bond interest payments as bonds are contractually obligated to make interest payments to their bondholders.

Preferred Stock Dividends