Which one of the following statements is not true about preferred stock? Preferr

Question

Which one of the following statements is not true about preferred stock? Preferred stock is a hybrid security sharing features of both bonds and common stock. Preferred shareholders’ dividends are paid before any dividends are paid to common shareholders. Preferred shareholders receive preferential treatment over bondholders in a liquidation. Preferred shareholders generally receive a fixed dividend payment in perpetuity. Companies can omit preferred dividend payments without fear of pushing the firm into bankruptcy.

Explanation / Answer

correct option is "C" -Preferred shareholders receive preferential treatment over bondholders in a liquidation

Bondholders have a preferential treatment over preferredshareholders in event of liquidation since they are the debtholders (liability of the company)

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