Quiz 20: Corporations: Formation and Capital Stock Transactions
The Ability to Convert Preferred Stock to Common Stock Can
The ability to convert preferred stock to common stock can make the preferred stock less attractive to investors.
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Common stock can be converted to preferred stock at the shareholder's discretion.
Before dividends can be paid,they must be declared and voted upon by the shareholders.
A reduction in dividends distributed to shareholders from one year to the next leads to loss of investor confidence and reduced market prices for the stock.
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