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All of the following statements are true about preferred stock EXCEPT:
A. Preferred dividends are paid before common
B. In most cases dividends are paid semi-annually
C. Corporations must pay preferred dividends
D. Preferred shareholders are paid before common shareholders upon liquidation of a corporation

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Answer:

The answer is: B) In most cases dividends are paid semi-annually

Explanation:

Preferred dividends:

  • are paid before common dividends,
  • usually yield higher rates,
  • and are paid in shorter terms.                

In most cases they are paid on a monthly or quarterly basis. Semi-annual payments occur once every 6 months (or twice a year) and for preferred dividends that is usually considered a long time.

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