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Which of the following is false about the differences between common stock and preferred stock? If none of the answer choices is false, select choice
Which of the following is false about the differences between common stock and preferred stock? If none of the answer choices is false, select choice
A Common stock ownership offers investors control rights ie voting rights in the company's management and policies; preferred shares do not give investors control rights.
B Common stock does not guarantee dividends to investors, but can have substantial dividend growth over time if a company does well; preferred shares often offer fixed dividends, which do not grow over time.
C Preferred stock is higher in the capital structure of a firm than common stock; if a company files for bankruptcy, preferred shareholders have a preferential claim to the company's assets ie preferred shareholders "get paid first" in bankruptcy
D If a company does poorly, it can suspend dividend payouts to common stockholders ie stop paying dividends without having to file for bankruptcy. If a company suspends dividends to preferred shareholders, these shareholders can push the company into bankruptcy to recover the dividends they are owed.
E All of the above statements, AD are true regarding the differences between common and preferred stock. There are no incorrect statements above.
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