Preferred stockholders ________. A. have preference over creditors in the case of liquidation B. do not have preference over co

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Preferred stockholders ________. A. have preference over creditors in the case of liquidation B. do not have preference over co

mmon stockholders in the case of liquidation C. have preference over bondholders in the case of liquidation D. do not have preference over bondholders in the case of liquidation

Business

1 answer:

otez555 [7] · Answer 1 · 2022-06-06T01:06:47+03:00

Answer: Option D

Explanation: Preferred stockholders refers to the holders of preference shares of an organisation. These shareholders get a fixed rate of dividend just like bondholders but only if the company has profit.

The interest rate of these shareholders is higher than the bondholders but lower than equity shareholders. Therefore, In case of liquidation they get paid before common shareholders but after bondholders.

Hence the correct option is D.

Preferred stockholders​ ________. A. have preference over creditors in the case of liquidation B. do not have preference over co

Preferred stockholders ________. A. have preference over creditors in the case of liquidation B. do not have preference over co