Question

A customer holds 100 shares of ABC Corp $100 par non-convertible preferred stock. If ABC declares and pays a 10% common stock dividend, then as of the payable date, the customer will now have:A. 90 shares of ABC preferred stock
B. 100 shares of ABC preferred stock
C. 100 shares of ABC preferred stock and 10 shares of ABC common stock
D. 110 shares of ABC preferred stock

Answer 1

If ABC declares and pays a 10% common stock dividend, then as of the payable date, the customer will now have 100 shares of ABC preferred stock

Explanation:

When ABC announces and charges a 10% common stock dividend, it will in no way benefit consumers who have preferred non-convertible or convertible stocks

Preferred stock is a type of stock with any mixture and is typically a composite product with features not owned by the common stock like property of both a stock and a debt instrument.

Preferred securities will make the perfect investment for those seeking a better return than for shares and common stock dividends. But they are forgetting the safety of bonds and the uncontrolled stock shelf.