The par value on a preferred stock entitles the holder to
A)priority on all cumulative dividends.
B)an established amount of money if the company is liquidated.
C)a minimum amount of convertible common stock.
D)None of these options

Question

Quizplus · Accepted Answer

The par value on a preferred stock typically represents the amount that a shareholder will receive per share if the company is liquidated. Therefore, it entitles the holder to an established amount of money if the company is liquidated. However, it does not necessarily give priority on dividends or a minimum amount of convertible common stock.

The Par Value on a Preferred Stock Entitles the Holder