If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders?

Question

Quizplus · Accepted Answer

Cumulative, participating preferred stock means that preferred stockholders have the right to receive current-year dividends as well as all unpaid dividends from prior years. They do not have to forgo dividends for any periods when no dividends are declared. They do not receive a fixed dividend each year regardless of the amount of dividends declared. They may or may not have an option to convert their shares to common stock at a specified date, but this is not a defining feature of this type of preferred stock.

If a Corporation Issues Cumulative, Participating Preferred Stock, Which of the Following