Which one of the following accurately describes the features of preferred stock? Preferred dividends must be paid before dividends can be paid to common stockholders. A frim can go bankrupt for not paying preferred dividends. Preferred dividends are noncumulative. Preferred dividends cannot be deferred indefinitely. Similar to common stock, preferred stock generally carries voting rights.

Which one of the following accurately describes the features of preferred stock? Preferred dividends must be paid before dividends can be paid to common stockholders. A frim can go bankrupt for not paying preferred dividends. Preferred dividends are noncumulative. Preferred dividends cannot be deferred indefinitely. Similar to common stock, preferred stock generally carries voting rights.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 1MC: Which of the following is not a characteristic that sets preferred stock apart from common stock? A....

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What is the difference between a stock dividend and a stock split? As a stockholder, would you prefer to see your company declare a 100% stock dividend or a 2-for-1 split? Assume that either action is feasible.
Which of the following is not a characteristic that sets preferred stock apart from common stock? A. voting rights B. dividend payments C. transferability D. ownership
Which of the following statements(s) is (are) false regarding preferred stock? a. Preferred stock does not carry voting rights b. Like bonds, preferred stocks have maturity c. Preferred stock dividends are not a liability of the firm unless they are declared d. Preferred stock dividends must be paid before dividends can be paid to common stockholders
Which of the following statements regarding preferred stock is true? a.Dividends are guaranteed to preferred stockholders. b.Preferred stockholders have a lower chance of receiving dividends than common stockholders do. c.When only one class of stock is issued, it is called preferred stock. d.Cumulative preferred stock has a right to receive regular dividends that were not declared (paid) in prior years.
As discussed in the chapter, preferred stock offers an investor certain preferences over common stock in relation to dividends and liquidation value. In theory, these preferences should make preferred shares more attractive to potential investors than common stock. In practice, however, a majority of companies do not issue preferred stock, and most investors seem to favor putting their investment dollars into common shares. Discuss some of the reasons a company might not issue preferred stock, and why most investors choose common over preferred.
Which of the following statements is not true about preferred stock? A.The rate of dividend is usually fixed B.Stockholders' usually have a preference as to dividends C. Stockholders always have a voting right D. Stockholders' usually have a preference as to assets upon liquidation of the corporation
Which of the following statements(s) is (are) true regarding preferred stock? a. Preferred stock dividends are not a liability of the firm unless they are declared b. Preferred stock dividends are paid after dividends are paid to common stockholders c. Like bonds, preferred stocks have maturity d. Preferred stock does carry voting rights
Which of the following is FALSE regarding preferred stock Preferred dividends are generally fixed A company is NOT allowed to omit the preferred dividends and still pay dividends to the common stockholders Preferred stockholders have the right to elect a pro-rata portion of the board of directors Preferred stock trades in the secondary market between investors Most preferred stock is cumulative, meaning that if the company is behind on paying preferred dividends, it must be brought up to date before dividends can be paid to the common stockholders.
If a preferred stock is of the cumulative type, a. dividends cannot be passed if they are earned. b. unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common stockholders. c. dividends must be paid, and if not a liability is created. d.dividends must be paid on an equal basis with common stock, so long as earnings permit.
When comparing common stock and preferred stock of the same company, it is fair to say that A. the Securities and Exchange Commission allows only one class of common stock. B. companies sometimes have two different classes of shares with unequal rights to dividends and votes. C. investors are indifferent between class A and class B shares. D. all shares, no matter how many classes, are all created with the same equal rights.
In what way is a preferred stock usually more similar to a bond than to a common stock? O a. Preferred stockholders are more risky than common stocks O b. Preferred stockholders elect the board of directors of the organization O c. Preferred bondholders participate in the growth of the company through increases in dividends and stock prices O d. Preferred stockholders are typical entitled fixed payments O e. If the company were to go into liquidation, preferred stockholders will be entitled to payments after common stockholders are paid-off
Preferred stocks are characterized by all the following, except a. the dividends declared for the investors of these stocks are tax deductible to the issuer b. may be convertible to ordinary or common stock c. voting rights are generally not present and not given to the holders of these stocks d. warrants may be attached to these securities