When a dividend is not declared on preferred stock,and the common shareholders cannot receive a dividend until all past and current dividends are paid to the preferred shareholders,the preferred stock is

Question

When a dividend is not declared on preferred stock,and the common share­holders cannot receive a dividend until all past and current dividends are paid to the preferred shareholders,the preferred stock is

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When a dividend is not declared on preferred stock, and the common shareholders cannot receive a dividend until all past and current dividends are paid to the preferred shareholders, the preferred stock is cumulative. This means that the unpaid dividends accumulate and must be paid to the preferred shareholders before any dividends can be paid to common shareholders. Noncumulative preferred stock, on the other hand, does not require the payment of unpaid dividends and only entitles the holders to receive current dividends. Participating and nonparticipating refer to whether the preferred shareholders have the right to share in any additional dividends beyond the fixed dividend rate specified in the stock's terms.

When a Dividend Is Not Declared on Preferred Stock,and the Common