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Multiple Choice
Which type of stock has special rights that give it priority over other types of stock in one or more areas?
A
Preferred stock
B
Common stock
C
Treasury stock
D
Convertible bonds
Verified step by step guidance
1
Understand the different types of stock mentioned in the problem: Preferred stock, Common stock, Treasury stock, and Convertible bonds.
Preferred stock is a type of stock that typically has special rights, such as priority in dividend payments and claims on assets in the event of liquidation, over common stock.
Common stock represents ownership in a company and usually comes with voting rights, but it does not have priority in dividends or liquidation claims.
Treasury stock refers to shares that a company has repurchased from investors; these shares do not have voting rights or receive dividends.
Convertible bonds are not stocks but are debt instruments that can be converted into a predetermined number of common shares under certain conditions. They do not have the special rights associated with preferred stock.