What is the significance of the name preferred stock?
A) It is the type of stock that most investors would rather have.
B) Its claims on dividends are paid before those of common stock.
C) The overall return on preferred stock is higher than that on common stock.
D) This stock is available only to select individuals associated with the company.
E) This stock provides the most powerful voting rights.

Question

Quizplus · Accepted Answer

The name "preferred stock" is significant because it indicates that these shares have priority or preference over common stock when it comes to receiving dividends. Preferred stockholders are typically entitled to receive their dividend payments before common stockholders, hence the name "preferred."

What Is the Significance of the Name Preferred Stock