\"The liquidating value of preferred stock is the amount of cash for which it ca
ID: 2574378 • Letter: #
Question
"The liquidating value of preferred stock is the amount of cash for which it can currently be exchanged." Do you agree? Explain. A. Yes. Liquidating value is the dollar measurement of the preference of preferred stockholders to receive assets in the event of corporate liquidation. B. Yes. Liquidating value is the dollar measurement of the preference of preferred stockholders to receive assets or promissory notes in the event of corporate liquidation. C. No. Liquidating value is the dollar measurement of the preference of preferred stockholders to receive assets in the event of corporate liquidation. D. No. Liquidating value is the dollar measurement of the preference of common stockholders to receive assets in the event of corporate liquidation.
Explanation / Answer
The option C. No. Liquidating value is the dollar measurement of the preference of preferred stockholders to receive assets in the event of corporate liquidation. is the correct option.
Explanation:
The preferred stockholders get preferential right to receive their value of the preferred stock at the time of liquidation before the common stockholders. So, the dollar measurement of the preference of preferred stockholders is to be considered as liquidating value of preferred stock.
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