Question

Which of the following statements pertaining to preferred stock is not correct?
A. Preferred stock may have an adjustable rate which pays a dividend that is adjusted, usually on a quarterly basis.
B. Preferred stock dividends are contractual obligations that must be paid in profitable years.
C. Most preferred stock issues are nonparticipating, meaning that the shareholders are entitled to receive only dividends based on the stated dividend rate.
D. Preferred shareholders are given preference with respect to both dividend distributions and in liquidation of the company.

Answer

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