Question

which is true concerning preferred stock?

A. preferred stock is considered equity on the company balance sheet

b. preferred stock holders have voting rights for the company board of directors

C. preferred stock payments are variable like common stock

d. preferred stock is viewed as more risky by investors than a firm's common stock

Answer 1

Correct answer: A. preferred stock is considered equity on the company balance sheet

A preferred stock is hybrid of debt and common stock and generally recorded under equity head balance sheet.

Some features of Preferred stock:

• Preferred stock have no voting rights
• Preferred stock pays fixed amount of dividend
• It has preferential right over assets of company as compared to common stock thus it is less risky than common stock.