What type of preferred share is entitled to dividends above its speciﬁed dividend if the common shares receive excess dividends and must receive dividends in arrears before the common dividends can be declared?
A) Cumulative and participating
B) Convertible and participating
C) Redeemable and participating
D) Redeemable and cumulative

Question

Quizplus · Accepted Answer

Cumulative and participating preferred shares are entitled to receive dividends in arrears before any dividends can be declared on common shares, and they also participate in excess dividends along with common shares if the company decides to distribute more than the specified rate.

What Type of Preferred Share Is Entitled to Dividends Above