Preferred shares differ from common shares in that preferred shares:
A)have more voting power and,as such,greater control over the management of the company.
B)because preferred shareholders are paid dividends before common shareholders.
C)receive a tax-free dividend.
D)all of the answers are acceptable.

Question

Quizplus · Accepted Answer

Preferred shares have priority over common shares in receiving dividends, which means that they are paid dividends before common shareholders. They generally do not have voting power and do not control the management of the company to the same extent as common shareholders. Tax treatment of dividends varies depending on the jurisdiction, but it is not accurate to say that preferred shares receive a tax-free dividend in general. Option D is incorrect as option A is not accurate.

Preferred Shares Differ from Common Shares in That Preferred Shares