Which of the following is typically a feature of preferred stocks?
A) They are settled prior to common stocks during liquidation.
B) They are mostly noncumulative in nature.
C) They are paid dividends that grow at a constant rate.
D) They carry voting rights and have maturity date.

Question

Quizplus · Accepted Answer

Preferred stocks are typically settled prior to common stocks during liquidation, meaning that preferred stockholders will be paid out their portion of the assets before common stockholders receive anything. Option B is incorrect as preferred stocks can be either cumulative or noncumulative, depending on the terms of the specific stock. Option C is incorrect as preferred stock dividends may be fixed or variable, but they do not necessarily grow at a constant rate. Option D is incorrect as preferred stocks generally do not carry voting rights and do not have a maturity date.

Which of the Following Is Typically a Feature of Preferred