Which of the following statements about preferred stock is FALSE?
A) Preferred stock has a higher-priority claim on the firm's assets than the common stock.
B) Failure to pay dividends on preferred stocks will result in a default.
C) Preferred stock has a lower-priority claim on the firm's assets than the firm's creditors in the event of default.
D) Preferred stock typically pays a fixed dividend.

Question

Quizplus · Accepted Answer

Failure to pay dividends on preferred stocks does not typically result in a default. However, it may negatively impact the price of the preferred stock and the issuer's ability to issue future preferred stocks.

Which of the Following Statements About Preferred Stock Is FALSE