Question

Preferred stockholders hold a claim on assets that has priority over the claims of A) both common stockholders and bondholders. B) neither common stockholders nor bondholders. C) common stockholders, but after that of bondholders. D) bondholders, but after that of common stockholders.

Answer 1

Answer:

The correct answer is C) common stockholders, but after that of bondholders.

Explanation:

Preferred shares grant an additional economic privilege, which allows for greater compensation when the dividend distribution is made. Therefore, a request issued by these shareholders directly affects the general result, and must be evaluated in order to grant the required returns to each individual partner.