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    Business
  3. Study Set
    Financial Management Theory and Practice Study Set 4
  4. Exam
    Exam 20: Hybrid Financing: Preferred Stock, Warrants, and Convertibles
  5. Question
    Preferred Stockholders Have Priority Over Common Stockholders with Respect to Dividends
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Preferred Stockholders Have Priority Over Common Stockholders with Respect to Dividends

Question 2

Question 2

True/False

Preferred stockholders have priority over common stockholders with respect to dividends, because dividends must be paid on preferred stock before they can be paid on common stock.However, preferred and common stockholders normally have equal priority with respect to liquidating proceeds in the event of bankruptcy.

Correct Answer:

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