The cumulative feature on preferred stock means that regular dividends to preferred stockholders omitted in past years must be paid in addition to the current year's dividend before any dividend distribution may be made to common stockholders.

Question

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The cumulative feature of preferred stock ensures that if any dividends have been missed in the past, they must be paid out to preferred shareholders before any dividends can be distributed to common shareholders. This includes the current year's dividend and any arrears.

The Cumulative Feature on Preferred Stock Means That Regular Dividends