If a company has issued preferred stock
A) the common shareholders will have weaker voting rights.
B) preferred shareholders will be allowed to choose one or more members of the board of directors.
C) dividends on preferred stock will be higher than the common dividends.
D) preferred dividends will have to be paid before the company can pay dividends on common stock.

Question

Quizplus · Accepted Answer

Preferred shareholders have a priority claim on dividends over common shareholders. This means that the company must pay dividends on preferred stock before it can pay dividends on common stock. Preferred shareholders typically do not have voting rights, and the board of directors is elected by the common shareholders. The dividend rate on preferred stock is generally fixed and higher than the dividend rate on common stock.

If a Company Has Issued Preferred Stock