harriet recently purchased 100 shares of abc preferred stock, paying a 4% dividend. which of the following statements is correct? a) young, high-income investors looking for returns in the form of capital appreciation are the primary purchasers of preferred stock. b) harriet must receive her $40-per-share dividend before the common stockholders receive their dividends. c) harriet will stop receiving dividends after 10 years. d) if abc preferred stock is cumulative, harriet must receive any unpaid abc preferred stock dividends from prior periods before abc can pay any dividends to their common stockholders.

Respuesta :

Harriet recently purchased the 100 shares of ABC preferred stock, paying 4% dividend is Harriet must receive her $40-per-share dividend before common stockholders receive dividends.  

What is a dividend?

A corporation may pay its shareholders a dividend when it distributes its profits to them. When a business makes money or has a surplus, it can distribute a portion of that money to its shareholders in the form of dividends. Any unused funds are withdrawn and put back into the company. A corporation is typically not allowed to pay a dividend out of its capital; instead, it must use its profit from the current year as well as any retained earnings from prior years. Distribution to shareholders can take the form of cash (often a deposit into a bank account) or, if the company has a dividend reinvestment plan, the amount can be paid by the issuance of more shares or by share repurchase. A distribution of assets may occur in several circumstances.

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