When shares are involved, even preferred shares, there is no legal obligation to pay dividends, but a failure to repay ________ constitutes a breach of the corporation's legal obligation.

A) debts
B) assets
C) bondholders
D) shareholders
E) par-value shares

Preferred Shares

Shares giving the shareholder preference over other classes of shares; that preference often pertains to the payment of dividends.

Legal Obligation

A legal obligation is a requirement imposed by law, where a person is required to perform or refrain from performing a certain action.

Dividends

Payments made by a corporation to its shareholders, usually derived from the company's profits.