Question

    What is the primary characteristic that distinguishes

    common equity from preferred equity in the capital markets?
    A Common equity holders have priority over preferred equity holders for dividend payments. Correct Answer Incorrect Answer
    B Common equity holders have voting rights in the company, while preferred equity holders do not. Correct Answer Incorrect Answer
    C Common equity is typically repaid before preferred equity in the event of liquidation. Correct Answer Incorrect Answer
    D Preferred equity holders are entitled to higher dividends than common equity holders. Correct Answer Incorrect Answer
    E Common equity can be redeemed by the company, while preferred equity cannot. Correct Answer Incorrect Answer

    Solution

    Common equity holders have voting rights in the company and are the last to receive dividends or liquidation proceeds. Preferred equity holders, while having priority over common equity holders in dividends and liquidation, typically do not have voting rights.

    Practice Next
    More Financial Management Questions
    ask-question