A preferred share on which the right to receive dividends is lost for any year that the dividends are not declared is a
A)Participating preferred share
B)Callable preferred share
C)Cumulative preferred share
D)Convertible preferred share
E)Noncumulative preferred share

Question

Quizplus · Accepted Answer

Noncumulative preferred shares do not accumulate missed dividend payments, meaning that if a dividend is not declared in a given year, shareholders do not have the right to receive those missed dividends in the future. This is different from cumulative preferred shares, which do accumulate missed dividends, and participating preferred shares, which have the ability to receive additional dividends if the company's earnings exceed a certain threshold. Callable preferred shares can be redeemed by the issuing company at a specified price, while convertible preferred shares can be converted into common shares of the company.

A Preferred Share on Which the Right to Receive Dividends