Question

Which of the following statements concerning preferred stocks is true? The par value of a stock is always the same as the initial selling price. Preferred stock dividends per share are normally increased as the earnings of the firm increase. Preferred stockholders have a prior claim on the income and assets of the firm as compared to the claims of lenders. Preferred dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems.

Answer 1

CORRECT ANSWER : Preferred dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems. (THUMBS UP PLEASE)

EXPLANATION : The par value may be different than initial selling price, if it is issued at discount or premium, with or without flotation cost, so it is not correct answer. preferred stocks are like debentures. dividend rate is fixed so it is also wrong. preferred stock holders are paid after lender, so it is also not correct