Preferred Stock
Which of the following shareholders has priority in receiving dividends?
Priority: Bonds -> Preferred -> Common (creditors before owners).
Complete Analysis & Legal Rationale
Preferred stockholders have priority over common stockholders for dividend payments. However, bondholders (creditors) must be paid interest before any dividends are distributed to shareholders.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Common stockholders are paid LAST after preferred stockholders receive their dividends.
Matches the verified teaching point in the explanation.
Bondholders receive interest payments, not dividends. They are creditors, not owners.
Warrant holders have the right to buy stock but receive no dividends until they exercise.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.