SIE Exam Question 325: Answer and Explanation

Question: 325

Preferred stock includes which of the following features?

I. Voting rights

II. Priority over debentures in a corporate liquidation

III. Dividends if declared by the Board of Directors

• A. I only
• B. III only
• C. II and III
• D. I, II and III

Correct Answer: B

Explanation:

B - Preferred stock pays dividends if declared by the Board of Directors. Preferred stock generally does not have voting rights. While it has priority over common stock in the event of a corporate liquidation, it does not have priority over corporate debt, including debentures.