SIE practice questionhardPreferred vs Common Stock
In a corporate liquidation, which security has the lowest claim on assets?
- ACommon stock✓ Correct answer
- BParticipating preferred stock
- CCumulative preferred stock
- DConvertible preferred stock
Explanation
Why A — Common stock
Common stockholders are last to be paid in liquidation, after all creditors and all classes of preferred stock. Preferred shareholders—regardless of type—have senior claims over common.
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