Question

which of the following statements about preferred stock is true? group of answer choices preferred stock carries voting rights. preferred stock can be owned only by upper management. preferred stock produces a fixed-amount dividend. preferred stockholders receive dividends before bondholders receive interest. preferred stockholders receive dividends after common stockholders.

Answer 1

Preferred stock typically offers a fixed-amount dividend and prioritizes dividend payments to shareholders before those holding common stock, but after bondholders. Statement 3 is the correct one.

Step-by-step explanation:

The correct statement about preferred stock is that it produces a fixed-amount dividend. Preferred stock is a type of stock that generally does not carry voting rights, unlike common stock. However, preferred shareholders have priority over common shareholders when it comes to dividend payments, meaning they receive dividends before common stockholders do. The claim that preferred stockholders receive dividends before bondholders receive interest is incorrect because bondholders are creditors of the firm and are paid before equity holders. Additionally, preferred stock is not exclusive to upper management and can be owned by any investors.