Use the following three statements to answer this question: 1. Dividends are the legal obligation of the firm. 2. A firm's residual earnings technically belong to the preferred shareholders. 3. The market prices of preferred shares increase when market rates decline, and vice versa. O a. only 1 is correct O b. 1 and 3 are correct Oc. only 2 is correct O d. 2 and 3 are correct O e. only 3 is correct