Question

larry Nelson holds 1,000 shares of General Electric (GE) common stock. As a stockholder, he has the right to be involved in the election of its directors, who are responsible for managing the company and achieving the company’s objectives. True or False: Larry will receive dividends before preferred stockholders.

Answer 1

Answer:

False

Explanation:

Preferred shareholders are category of shareholders of company that have priority over the income of the company. This implies that whenever dividend is declared, preferred shareholders are paid first before common shareholders are paid.

This means that common shareholders are paid dividends whatever is left out of dividends declared after preferred shareholders have been paid.

Therefore, Larry will NOT receive dividends before preferred stockholders.