Which of the following does not correctly describe preferred stock?
A) Preferred stock has a higher priority status relative to common stock.
B) Preferred shareholders are guaranteed to receive dividends.
C)Preferred stock does not grant voting rights.
D)Preferred stockholders receive dividends in arrears only if the shares are cumulative.

Question

Quizplus · Accepted Answer

While preferred shareholders have a higher priority status relative to common stock and often do not have voting rights, they are not necessarily guaranteed to receive dividends. The payment of dividends to preferred shareholders is typically determined by the company's board of directors and can be suspended or omitted if the company is facing financial difficulties or chooses to allocate funds differently.

Which of the Following Does Not Correctly Describe Preferred Stock