In the case of liquidation, where do preferred shareholders rank?
A)Before creditors and common shareholders
B)After creditors and common shareholders
C)After creditors and equally with common shareholders.
D)Before common shareholders and after creditors.

Question

Quizplus · Accepted Answer

In the case of liquidation, preferred shareholders rank before common shareholders but after creditors. This means that preferred shareholders have priority over common shareholders in terms of receiving their share of the assets remaining after all the creditors have been paid, but they are still behind the creditors in terms of who gets paid first. Therefore, option D, "Before common shareholders and after creditors," is the correct choice.

In the Case of Liquidation, Where Do Preferred Shareholders Rank