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SIE: Equity Securities
SIE practice questionmediumPreferred Stock

Which of the following is a typical characteristic of preferred stock?

  1. AGuarantees a return of principal
  2. BOffers the right to vote at annual meetings
  3. CPays a fixed dividend✓ Correct answer
  4. DIs tax-free to the investor
Explanation

Why CPays a fixed dividend

Preferred stock typically pays a fixed dividend. It usually does not offer voting rights, principal guarantees, or tax-free status.

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