Preferred stock is similar to common stock in that:
A)it has no fixed maturity date.
B)the nonpayment of dividends can bring on bankruptcy.
C)dividends are limited in amount.
D)all of the above.

Question

Quizplus · Accepted Answer

Preferred stock is similar to common stock in that both have no fixed maturity date. However, unlike common stock, the nonpayment of dividends on preferred stock usually does not bring on bankruptcy. Additionally, while dividends on preferred stock are usually limited in amount, they are often fixed and may be paid before dividends on common stock. Therefore, only statement A is true.

Preferred Stock Is Similar to Common Stock in That