Preferred stock that provides for dividend payments based on certain formulas allowing preferred stockholders to participate with common stockholders in the receipt of dividends beyond a specified amount is cumulative.

Question

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Preferred stock that allows for participation in dividends beyond a specified amount is called "participating preferred stock," not "cumulative preferred stock." Cumulative preferred stock refers to the accumulation of unpaid dividends.

Preferred Stock That Provides for Dividend Payments Based on Certain