Which of the following statements best describes preferred shares?
A) Preferred shareholders are paid before other debt holders in the event of company dissolution.
B) The dividends for preferred shares are a variable amount.
C) Preferred shares are less costly than debt financing.
D) Preferred shareholders have to be paid annually.

Question

Quizplus · Accepted Answer

Preferred shareholders have a higher priority of receiving payment in the event of a company dissolution compared to other shareholders and debt holders. This is why they are called "preferred" shareholders.

Which of the Following Statements Best Describes Preferred Shares