In the event of liquidation, preferred shareholders:
A)are guaranteed to get their investment back in full.
B)have first claim on remaining corporate assets after debts are paid.
C)may sell their shares for higher amounts than common stock.
D)may retain their proportionate share of voting rights.

Question

Quizplus · Accepted Answer

Preferred shareholders have priority over common shareholders in the event of liquidation, meaning they have first claim on remaining corporate assets after debts are paid. However, they are not guaranteed to get their full investment back and do not necessarily have a higher resale value than common stock. They may or may not retain their proportionate share of voting rights depending on the terms of the preferred stock.

In the Event of Liquidation, Preferred Shareholders