Which of the following is a disadvantage of issuing preferred stock from the common stockholders' perspective?
A) There is a seniority of preferred stockholder's claim over common stockholders.
B) The preferred stockholders have superior voting rights in the selection of board of directors.
C) The preferred stockholders are always paid a higher proportion of dividend payments.
D) Issuance of preferred stocks will result in a higher risk, to the disadvantage of common stockholders.

Question

Quizplus · Accepted Answer

Preferred stock typically has seniority over common stock in terms of claim on assets and dividends, which can be a disadvantage for common stockholders as it may limit the amount of funds available for them.

Which of the Following Is a Disadvantage of Issuing Preferred