1. Why is preferred stock called "preferred"? a. It is stock owned by company founders. b. It is listed on the balance sheet above Common Stock. c. It is preferred in the distribution of dividends. d. It sounds better than common stock. 2. How does cumulative preferred stock work for the investor? a. "Cumulative" means the investor is more likely to receive the stated dividend rate before any dividend is paid to common shareholders. b. The corporation does not have to pay this dividend. c. Preferred shareholders may elect to defer receiving the dividend and allow it to accumulate. d. The dividend rate multiplies every year. 3. In what ways, if any, may common stock be preferable to preferred stock? a. It receives dividends before preferred stockholders. b. It represents ownership in assets after all liabilities are satisfied upon dissolution. c. It is entitled to a seat on the board of directors. d. It makes the owner eligible to be named CFO. declared in 201. In 202, the directors voted to distribute dividends of $48,000. What amount of dividends, if any, will be distributed to holders of preferred stock? a. $50 b. $5 c. $50,000 d. $48,000 5. If the preferred shareholders are entitled to receive the preference rate, and in addition to share in any further dividends declared in a year, the stock is known as: a. cumulative. b. participating. c. nonparticipating. d. quasi-common. the preferred stock. In the current year, the corporation distributed dividends of $100,000. How much will be distributed to common stockholders? a. $60,000 b. $40,000 c. $100,000 d. $25