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SIE: Equity Securities
SIE practice questionmediumPreferred Stock - Participating

A participating preferred shareholder receives:

  1. ACash for shares anytime by demand.
  2. BGuaranteed voting rights each year.
  3. CThe right to force conversion to common stock.
  4. DStated dividend and possibly extra dividends with high company profits.✓ Correct answer
Explanation

Why DStated dividend and possibly extra dividends with high company profits.

Participating preferred allows extra dividends. Voting, forced conversion, or cashing out at will are not typical features.

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