Questions: Which of the following statements is NOT true about preferred stock? Preferred stock represents ownership in the firm. Preferred stockholders are not guaranteed dividend payments by the firm. Preferred stock holders have limited voting privileges relative to common-stock owners. Preferred stock dividends are paid by the issuer with after-tax dollars.

The answer is the fourth one: Preferred stock dividends are paid by the issuer with after-tax dollars.

Explanation for each option:

1. Preferred stock represents ownership in the firm.

   • This statement is true. Preferred stock is a type of equity, and owning it means having a stake in the company.

2. Preferred stockholders are not guaranteed dividend payments by the firm.

   • This statement is true. While preferred stockholders typically receive dividends before common stockholders, these dividends are not guaranteed and can be suspended by the company.

3. Preferred stock holders have limited voting privileges relative to common-stock owners.

   • This statement is true. Preferred stockholders usually have fewer voting rights compared to common stockholders, and in many cases, they may not have any voting rights at all.

4. Preferred stock dividends are paid by the issuer with after-tax dollars.

   • This statement is NOT true. Preferred stock dividends are typically paid out of the company's after-tax profits, but the statement as it stands is misleading because it implies a different tax treatment compared to other dividends. The key point is that dividends, whether for preferred or common stock, are paid from the company's net income after taxes have been accounted for.

Summary: The statement "Preferred stock dividends are paid by the issuer with after-tax dollars" is not true in the context provided, as it can be misleading regarding the tax treatment of dividends.