Preferred stock in which the shareowners receive the regular dividend, plus an additional dividend if the issuer's dividend on its common stock exceeds a specified amount is best described as:
A) straight preferred stock.
B) cumulative preferred stock.
C) participating preferred stock.

Question

Quizplus · Accepted Answer

Participating preferred stock allows shareholders to receive not only their fixed dividend payments but also additional dividends under certain conditions, such as when the company's common stock dividends exceed a predetermined level. This feature distinguishes it from straight (non-participating) preferred stock, which offers only fixed dividends, and cumulative preferred stock, which focuses on the accumulation of unpaid dividends.

Preferred Stock in Which the Shareowners Receive the Regular Dividend