Participating preferred stock will:
A) share with common stock in excess earnings after preferred payments and specified payments to common stock.
B) participate in earnings only to the extent that all other classes do.
C) participate in earnings to the same extent as common stock.
D) accumulate dividends that will be paid later.

Question

Quizplus · Accepted Answer

Participating preferred stock allows holders to receive dividends that exceed the stated amount if the company has excess earnings. After the preferred dividends are paid, and specified payments are made to common stock, participating preferred stockholders can share in additional earnings, often on a pro-rata basis with common stockholders.

Participating Preferred Stock Will