Participating preferred stock is advantageous to common stockholders.

Name: Participating preferred stock is advantageous to common stockholders.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Participating preferred stock allows the holders to receive additional dividends in addition to their fixed dividend if the company exceeds certain performance thresholds. This reduces the potential earnings that would go to common stockholders, making it disadvantageous for them.

Participating Preferred Stock Is Advantageous to Common Stockholders