SIE practice questioneasyPreferred Stock — Features Comparison
Compared to common stock, preferred stock typically offers:
- AA fixed dividend and higher claim on assets in liquidation✓ Correct answer
- BNo dividend payments but guaranteed capital gains
- CHigher voting rights and lower dividend priority
- DGreater capital appreciation potential
Explanation
Why A — A fixed dividend and higher claim on assets in liquidation
Preferred stock typically pays a fixed dividend and has priority over common stock in both dividend payments and liquidation claims. Preferred stock generally does NOT have voting rights (A is wrong). Common stock usually offers greater capital appreciation potential (C is wrong). Preferred does pay dividends (D is wrong).
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