A dividend preference for preferred stock means that

A dividend preference for preferred shares means that: Dividends are paid quarterly. Preferred shareholders are allocated their dividends before any dividends are allocated to common shareholders. Only preferred shareholders will receive dividends. All of these answers are correct. Preferred shareholders are guaranteed dividends.

Answer

A dividend preference for preferred shares means that Preferred shareholders are allocated their dividends before any dividends are allocated to common shareholders. Second option is the correct option. Preferred stockholders are given priority in payment of dividends over common stockholders. First, dividends are paid to preferred stockholders and then from remaining profits, dividends are paid to common stockholders. However there is no guarantee of dividends to preferred stockholders.

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