With regard to preferred stock,

Question

Quizplus · Accepted Answer

Preferred stockholders may have the right to participate in extra dividends if they are declared, but this is not a legal requirement. Preferred stock usually does require mandatory dividend payments, but this does not mean that no flexibility is provided to the issuing company. Option B is incorrect as preferred stockholders do expect dividends, which is a main characteristic of this type of stock. Option D is also incorrect as there is no legal requirement for a corporation to declare a dividend on preferred stock.

With Regard to Preferred Stock