If preferred stock is specified as 8% preferred stock, then preferred
A)dividends are a percentage of the par value of the preferred stock.
B)shareholders vote in the election of the members of the board of directors.
C)dividends are a percentage of corporate profits.
D)dividends in arrears must be paid before common shareholders receive dividends.

Question

Quizplus · Accepted Answer

8% preferred stock means that preferred dividends will be paid as a percentage of the par value of the preferred stock. For example, if the par value of the preferred stock is $100, then the annual dividend paid to preferred shareholders will be $8 per share (8% of $100).

If Preferred Stock Is Specified as 8% Preferred Stock, Then