SIE practice questioneasyPreferred Stock – Participating
Participating preferred stockholders may receive:
- AAdditional dividends if the company exceeds earnings targets✓ Correct answer
- BGuaranteed dividend increases each year
- CVoting rights equal to common shareholders
- DA fixed rate of return only
Explanation
Why A — Additional dividends if the company exceeds earnings targets
Participating preferred stock can receive extra dividends if certain company targets are met. They do not get guaranteed increases, equal voting rights, or just a fixed return.
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