A cumulative dividend on preferred stock:
A) must be paid at a later date, usually with interest.
B) can be skipped even if dividend payments are made to common stockholders.
C) are paid to stockholders at the discretion of the board of directors.
D) must be paid at a later date, usually without interest.
E) are treated like interest payments on bonds.

Question

Quizplus · Accepted Answer

A cumulative dividend on preferred stock means that if the company fails to pay the dividend one year, it accumulates and must be paid in later years. The payment is usually made without interest at a later date. Therefore, option D is the correct choice.

A Cumulative Dividend on Preferred Stock