A difference between preferred stock and common stock is preferred shareholders ________.
A)have voting rights,while common shareholders do not
B)have the right to share in any assets left if the company goes out of business after both the creditors and common shareholders receive their share
C)have the right to buy new shares in order to maintain their percentage ownership before the company can issue new shares to the general public
D)must receive their dividends before any of the common shareholders are paid

Question

Quizplus · Accepted Answer

Preferred shareholders must receive their dividends before any of the common shareholders are paid. Option A is incorrect as preferred shareholders typically do not have voting rights. Option B is incorrect as both preferred and common shareholders have the right to share in any assets left if the company goes out of business after the creditors have been paid. Option C is incorrect as this refers to preemptive rights, which may or may not be granted to preferred shareholders.

A Difference Between Preferred Stock and Common Stock Is Preferred