Question

A dividend preference for preferred stock means that:_________A. Dividends must be declared on preferred stock. B. Preferred shareholders are guaranteed dividends. C. Preferred stockholders prefer dividends more than common stockholders. D. Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders. E. Dividends are paid quarterly.

Answer 1

Answer:

D. Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.

Explanation:

Before declaring dividend on common shares, it is always necessary for the company to pay dividends on preferred shares and dividends are declared when there are sufficient profits.