The holders of preferred stock or preference shares get Preference over equity shareholders Preference over equity shareholders and debt holders Higher dividend over the equity shareholders in the event of high growth More voting rights

The holders of preferred stock or preference shares get Preference over equity shareholders Preference over equity shareholders and debt holders Higher dividend over the equity shareholders in the event of high growth More voting rights

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter21: Corporations: Taxes, Earnings, Distributions, And The Statement Of Retained Earnings

Section: Chapter Questions

Problem 1MC

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Question

The holders of preferred stock or preference shares get

Preference over equity shareholders

Preference over equity shareholders and debt holders

Higher dividend over the equity shareholders in the event of high growth

More voting rights

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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