SIE practice questionmediumDividends
Which of the following is correct regarding cash dividends on common stock?
- AThey are declared at the discretion of the board of directors.✓ Correct answer
- BThey must be paid quarterly.
- CThey are paid only to preferred shareholders.
- DThey are guaranteed by the company.
Explanation
Why A — They are declared at the discretion of the board of directors.
Cash dividends are declared at board discretion and are not guaranteed. They are not required quarterly and are not restricted to preferred shareholders only.
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