Question

When investors purchase ________ stock, they receive a priority claim in the payment of dividends, as well as assets if the business is liquidated. However, these investors do not have voting rights.a. commonb. preferredc. securedd. debenture

Answer 1

Preferred stockholders receive a priority claim in the payment of dividends as well as assets if the business is liquidated but they do not have voting rights.

The correct answer is B

Step-by-step explanation:

Common stockholders do not have any priority in the payment of dividend. They bear the highest risk in the event of liquidation. They have voting rights.

Preferred stockholders are entitled to fixed dividend and they have priority in the payment of dividend over the common stock holders. They do not have voting rights.

Secured stock is a stock that is pledged with an asset. It does not have any voting right.

Debenture is a long-term debt evidenced in writing. It is a fixed income security. Debenture holders have priority in the payment of interest over the preferred stockholders and common stockholders. They do not have voting rights.