Preferred stockholders have priority over common stockholders with respect to earnings.Dividends must be paid on preferred stock before they can be paid on common stock.In exchange for this priority to dividends,preferred stockholders give up their priority claims to common stockholders in the event of bankruptcy.

Question

Quizplus · Accepted Answer

Preferred stockholders have priority over common stockholders with respect to dividends, but they also typically have priority in the event of bankruptcy, not the other way around.

Preferred Stockholders Have Priority Over Common Stockholders with Respect to Earnings.Dividends