Series 6 - Investment Company And Variable Contracts Products Representative Exam

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What advantages do preferred stock shareholders have over common stock shareholders?

Preferred stock prices have more price appreciation per share than common stock. If a corporation goes bankrupt, preferred stockholders have priority claim over common stockholders on the remaining assets after creditors have been paid
A
Preferred stock prices have more price appreciation per share than common stock. If the directors declare dividends, preferred stockholders must receive their stated dividend in full before common stockholders may be paid the dividend
B
If a corporation goes bankrupt, preferred stockholders have priority claim over common stockholders on the remaining assets after creditors have been paid. If the directors declare dividends, preferred stockholders must receive their stated dividend in full before common stockholders may be paid the dividend
C
If a corporation goes bankrupt, preferred stockholders have priority claim over common stockholders on the remaining assets after creditors have been paid. Preferred stockholders have voting rights
D

Explanations

Preferred stockholders have priority claim over common stockholders in the event a company declares bankruptcy. Preferred stockholders must be paid any dividends in full before common stockholders receive their dividends. Share prices of preferred stock tends to move less than prices of the common stock. Preferred shareholders do not have voting rights; but common stockholders do.

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