Question

Question content area preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends. true false

Answer 1

It is a true statement that the preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

What is a preferred stockholders?

These are the owners of the preferred stock that is treated as a class of stock that granted certain rights that differ from common stocks.

The preferred shareholders have higher priority over a company's income which makes them being are paid dividends before the common shareholders. The common stockholders are last in line when it comes to company assets which makes them being paid out after creditors, bondholders, and preferred shareholders.

Therefore, It is a true statement that the preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

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