Which statement regarding preferred stocks is true?

Question

Quizplus · Accepted Answer

Preferred stocks are generally less risky than common stocks because they have a priority to dividends and liquidation proceeds over common stockholders. However, preferred stockholders still rank lower in priority than bondholders in the event of bankruptcy. Preferred dividends are usually cumulative, meaning if they are not paid in one period, they must be paid in the future before any dividends can be paid to common stockholders. Dividends on preferred stocks are not tax deductible by the issuing corporation.

Which Statement Regarding Preferred Stocks Is True