Preferred stock that pays the stockholder previously skipped dividends before the common stockholders can be paid any dividends is called ____ preferred stock.

Question

Quizplus · Accepted Answer

Cumulative preferred stock ensures that any missed dividends are accumulated and paid out before common stockholders receive any dividends. Callable preferred stock can be redeemed by the issuer, participating preferred stock allows holders to receive additional dividends if the company exceeds certain performance thresholds, and convertible preferred stock can be converted into common shares at a predetermined ratio. None of these options guarantee payment of missed dividends before common stockholders receive dividends.

Preferred Stock That Pays the Stockholder Previously Skipped Dividends Before