Understanding Preferred Shares

Very Easy Equity Markets And Instruments Preferred Shares

Preferred shares are a type of equity security that has specific characteristics distinguishing them from common shares. Investors often choose preferred shares for their fixed dividends and priority over common shares in the event of liquidation. Understanding these characteristics is crucial for evaluating investments in preferred shares.

Which of the following statements correctly describes a feature of preferred shares?

Preferred shares typically have voting rights in the company.

Preferred shares have fixed dividends that are paid before any dividends are paid to common shareholders.

Preferred shares generally do not receive any dividends.

Hint

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