Which of the following statements about preferred stock is true?

Question

Quizplus · Accepted Answer

Preferred shareholders typically have priority over common shareholders when it comes to receiving dividends. They are often entitled to a fixed dividend rate, which must be paid before any dividends can be distributed to common shareholders. Option A is incorrect because preferred shareholders typically do not have voting rights. Option C is also incorrect because preferred stock is not actually considered a hybrid between equity and debt. It is a type of equity investment, but with some characteristics similar to debt. Option D is incorrect because the attractiveness of preferred stock versus common stock depends on many factors, including the specific terms of the preferred stock offering and the investment goals of the individual investor.

Which of the Following Statements About Preferred Stock Is True