Preferred stock dividends:
A)become a debt of the firm if unpaid.
B)can be deferred indefinitely.
C)are only paid if common stock dividends are also paid.
D)have priority over debt interest payments but not common stock dividends.
E)are a tax-deductible business expense.

Question

Quizplus · Accepted Answer

Preferred stock dividends can be deferred indefinitely without the company facing bankruptcy, unlike debt interest payments. This characteristic distinguishes preferred stock from debt instruments.

Preferred Stock Dividends