Preferred stock is least likely to have which of the following characteristics?

• A. Fixed dividend payments
• B. Priority over common stock in dividend distribution
• C. Voting rights similar to common stockholders
• D. Preference in asset distribution upon liquidation

Answer: (C)

Verified step by step guidance

1. Understand the nature of preferred stock: Preferred stock is a type of equity that typically provides shareholders with fixed dividend payments and priority over common stockholders in dividend distribution and asset liquidation.
2. Review the concept of fixed dividend payments: Preferred stockholders are often entitled to fixed dividend payments, which are predetermined and paid before any dividends are distributed to common stockholders.
3. Examine priority in dividend distribution: Preferred stockholders have a higher claim on dividends compared to common stockholders, meaning they receive their dividends first.
4. Analyze preference in asset distribution upon liquidation: In the event of liquidation, preferred stockholders have a higher claim on the company's assets than common stockholders, but lower priority compared to creditors.
5. Clarify voting rights: Unlike common stockholders, preferred stockholders typically do not have voting rights. This characteristic distinguishes preferred stock from common stock, making voting rights least likely to apply to preferred stock.