Question

Stocks for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

Answer 1

Answer:

Preferred stocks

Explanation:

Preferred stocks are those that must be paid dividends first than common stock. The same thing happens in case of bankruptcy: preffered stock holders get paid first than common stock holders, although both are paid after bondholders.

The downside of preferred stocks is that they do not transfer control in the company. While common stock owners have the right to vote in company matters, preferred stock owners do not have that right.