Question

Which of the following is true of preferred stocks? A. Like bonds preferred stocks are due for payment on a fixed maturity date along with interest. B. Restrictive covenants of preferred stocks include provisions about listing of stocks on the securities exchange and determining the price of stock.C. A firm's bond indenture indicates how many authorized preferred shares and bonds it can issue.D. Preferred stock with a conversion feature allows holders to change each share into a stated number of shares of common stock.

Answer 1

Option D is the correct answer to this question.

Explanation:

Preferred Stocks on payment are not due. The distributions on the stock shares may or may not be paid depending on the type in the issue. Restrictive Preferred stock agreements do not include regulations on stock listing on the exchange of securities as well as on stock returns. These are and can not be counted as derogatory covenants. The indenture of an organization does not indicate how many preferred shares and bonds it can issue.

Preferred stock with a conversion feature allows holders to switch each share into a stated common stock number.

Other options are incorrect because they are not related to the given scenario.