Preferred stockholders must receive their stated dividends prior to the distribution of any earnings to common stockholders and bondholders.

Name: Preferred stockholders must receive their stated dividends prior to the distribution of any earnings to common stockholders and bondholders.
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Question

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Preferred stockholders must receive their stated dividends before common stockholders, but bondholders are paid before both as they are creditors, not equity holders.

Preferred Stockholders Must Receive Their Stated Dividends Prior to the Distribution