SIE practice questionmediumDividends
Which statement about common stock dividends is correct?
- AOnce declared, dividends must be paid to bondholders first
- BDividends must be paid in stock only
- CDividends are not guaranteed and may fluctuate✓ Correct answer
- DDividends are paid at a fixed rate to all shareholders
Explanation
Why C — Dividends are not guaranteed and may fluctuate
Common stock dividends are discretionary and can change or be skipped by the company. Dividends may be paid in cash or stock, bondholders are not entitled to dividends, and rates are not fixed for common shares.
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