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    Right or Attribute of Preferred Stocks

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    Which of the following is not usually a right or attribute of preferred stock?

    a) Having a claim to dividends in excess of the annual dividend requirement if dividends on common stock exceeds dividends on preferred stock
    b) Having a priority claim to dividends relative to the common stock's claim to dividends
    c) Having a priority claim in liquidation relative to the common stock;s claim in liquidation
    d) Having a claim to dividends that is cumulative over time if the annual dividend requirement is not satisfied

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    Solution Preview

    The answer is a) Having a claim to dividends in excess of the annual dividend requirement if dividends on common stock exceeds dividends on preferred stock.

    Preferred stock is given that name because preferred stockholders have a priority claim to dividends relative to the common stock's claim to dividends (i.e., if the ...

    Solution Summary

    This solution discusses the rights and attributes of preferred stock.

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