Preferred stockholders ________.
A) do not have preference over common stockholders in the case of liquidation
B) have preference over bondholders in the case of liquidation
C) do not have preference over bondholders in the case of liquidation
D) have preference over creditors in the case of liquidation

Question

Quizplus · Accepted Answer

In the case of liquidation, bondholders have preference over preferred stockholders. This means that bondholders will be paid first from the assets of the company before preferred stockholders. However, preferred stockholders do have preference over common stockholders in the case of liquidation, but this is not one of the options listed. Preferred stockholders do not have preference over creditors as they are not lenders to the company.

Preferred Stockholders ________