Cumulative preferred stockholders enjoy the first right to purchase any new shares of stock issued by the firm.

Question

Quizplus · Accepted Answer

Cumulative preferred stockholders have the right to receive dividends that were missed in the past before common stockholders receive any dividends, but this does not include a first right to purchase new shares. The right to purchase new shares before the public is typically referred to as preemptive rights, which is not a feature exclusive to cumulative preferred stock.

Cumulative Preferred Stockholders Enjoy the First Right to Purchase Any