Question

Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings? A A) Dual class B B) Cumulative C C) Non-cumulative D D) Preferred E E) Common

Answer 1

Answer:

Preferred stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings.

Option: (D)

Explanation:

• Preferred stock is known as the ownership share in a public company having both the equity and income fixed character.

• It takes more preference or the priority than the ones that are ordinary share dividends.

• It is generally considered same as the hybrid tool as it possesses the both characteristic of equity and constant income.

• They pay usually a stable dividend but have no right to vote as other shareholders.

• The preferred stock is highly sensitive with the interest rates changes in the market.