A violation of preferred stock restrictive covenants usually permits preferred shareholders to
A) force the company into bankruptcy.
B) sell their shares.
C) force the retirement of the preferred stock at or above its par value.
D) force the company to repurchase the shares at a stated amount below par.

Question

Quizplus · Accepted Answer

Preferred stock restrictive covenants specify certain restrictions or limitations on the issuer, and if violated, may allow preferred shareholders to enforce certain rights. One such right may be the ability to force the retirement of the preferred stock at or above its par value. This option allows the preferred shareholders to receive their original investment back, and potentially avoid further losses if the company's financial situation is deteriorating. Options A, B, and D are not typically permitted as remedies for violating restrictive covenants.

A Violation of Preferred Stock Restrictive Covenants Usually Permits Preferred