Question

As a preferred stockholder, you are entitled to numerous preferences and privileges over common stockholders. If you are a preferred stockholder of a company that has fallen on economic hardship and is likely to go bankrupt, which preference or privilege of preferred stock is going to be most useful to you

Answer 1

Answer:

asset distribution preference

Explanation:

In such a situation the preference or privilege that would be best for you is known as asset distribution preference or liquidation preference. This is a clause that dictates that the payout in case of a corporate liquidation (such as when they are about to go bankrupt) must first go to the preferred stockholders in order for them to get their money back first. Therefore, since you are a preferred stockholder this would be the biggest privilege for you, allowing you to recover your money quickly and move on to something else.