Series 7 practice questioneasyEquity Securities 2
Which statement about preferred stock is TRUE?
- APreferred stockholders vote before bondholders on interest rates
- BPreferred stock always matures at par on a stated date
- CPreferred stock dividends are a legal obligation like bond interest
- DPreferred stockholders have dividend preference over common stockholders✓ Correct answer
Explanation
Why D — Preferred stockholders have dividend preference over common stockholders
Preferred stock has priority over common stock for dividends and assets in liquidation. However, preferred dividends are not a legal obligation in the same way bond interest is.
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