Which of the following is false regarding bank preferred stock?
A) Preferred stock investor claims are senior to those of common stockholders.
B) All preferred stock investors pay taxes on only 20% of dividends.
C) Most preferred stock issues are adjustable-rate perpetual stock.
D) Preferred stock has the same disadvantages as common stock.
E) None of the statements is false.

Question

Quizplus · Accepted Answer

Not all preferred stock investors pay taxes on only 20% of dividends. This tax treatment only applies to qualified dividend income and depends on individual circumstances, such as the investor's tax bracket and holding period.

Which of the Following Is False Regarding Bank Preferred Stock