#1
What is the main characteristic of preferred stock?
Voting rights
Fixed dividend payments
Convertible to common stock
Unlimited growth potential
#2
What is the primary difference between preferred stock and bonds?
Bonds represent ownership in a company, while preferred stock represents debt
Bonds pay fixed interest, while preferred stock pays variable dividends
Preferred stockholders have voting rights, while bondholders do not
Bonds have maturity dates, while preferred stock does not
#3
In what way does preferred stock resemble debt instruments?
Interest payments
Ownership in the company
Voting rights
Maturity dates
#4
What is the primary advantage of preferred stock for investors compared to common stock?
Higher potential for capital gains
Fixed dividend payments
Unlimited growth potential
Limited voting rights
#5
What is the primary advantage of preferred stock for issuers compared to bonds?
Fixed interest payments
Flexibility in dividend payments
Maturity dates
No obligation to pay dividends
#6
Which of the following is a disadvantage of preferred stock for investors?
Higher potential for capital gains
Priority in liquidation
No dividend payments
Limited voting rights
#7
What does it mean when preferred stock is 'cumulative'?
Dividends accumulate if not paid in a given period
Dividends are distributed immediately
No dividend payments allowed
Convertible to common stock
#8
In the event of bankruptcy, how is preferred stock treated compared to common stock?
Preferred stockholders have priority over common stockholders
Common stockholders have priority over preferred stockholders
Both are treated equally
None of the above
#9
Which type of preferred stock allows the issuer to skip dividend payments without facing penalties?
Cumulative preferred stock
Non-cumulative preferred stock
Participating preferred stock
Convertible preferred stock
#10
What is the typical tax treatment for preferred stock dividends?
Taxed at a lower rate than common stock dividends
Taxed at the same rate as common stock dividends
Taxed at a higher rate than common stock dividends
Tax-exempt
#11
What is the primary advantage of preferred stock for issuers compared to common stock?
Higher potential for capital gains
Fixed dividend payments
Limited voting rights
No obligation to pay dividends
#12
What is the primary difference between cumulative and non-cumulative preferred stock?
Cumulative preferred stock has higher dividend rates
Non-cumulative preferred stock has priority in liquidation
Cumulative preferred stock allows for skipped dividend payments
Non-cumulative preferred stock accumulates unpaid dividends
#13
Which of the following is a feature unique to convertible preferred stock?
Fixed dividend payments
No voting rights
Convertible to common stock
Priority in liquidation
#14
What is the primary reason investors may choose preferred stock over common stock?
Higher potential for capital gains
Priority in liquidation
Fixed dividend payments
Unlimited growth potential
#15
What is the typical voting rights status of preferred stockholders?
Full voting rights
Limited or no voting rights
Voting rights equal to common stockholders
Voting rights only in special circumstances
#16
Which of the following is a feature commonly associated with participating preferred stock?
No voting rights
Fixed dividend payments
Convertible to common stock
Entitles holders to additional dividends after common stockholders receive theirs
#17
Which term refers to the ability of preferred stockholders to convert their shares into common stock?
Redemption
Conversion
Liquidation
Accumulation
#18
What is the main risk associated with holding non-cumulative preferred stock?
Market risk
Interest rate risk
Credit risk
Missed dividend payments may not be recovered
#19
What is the primary consideration for investors when evaluating convertible preferred stock?
Fixed dividend payments
Conversion ratio
Voting rights
Priority in liquidation