Question

(Ch. 10)

Preferred stock carries priority over common stock:
Both for _________ and at ____________

Answer 1

Preferred stock has priority over common stock in terms of receiving dividends and in the event of a company liquidation. Preferred stockholders get dividends first and have a higher claim on assets than common stockholders.

Step-by-step explanation:

Preferred stock carries priority over common stock for distributions (dividends) and at liquidation. Shareholders of preferred stock receive dividend payments before common stockholders, and in the event of a company's liquidation, preferred stockholders have a higher priority claim on company assets. Preferred shares usually have a fixed dividend, unlike common shares where dividends can fluctuate with the company's profitability.