A preferred stock in which omitted dividend payments must be paid in full prior to paying dividends to preferred stockholders is ____ preferred.
A) make-up
B) convertible
C) high yield
D) cumulative
E) call back

Question

Quizplus · Accepted Answer

Cumulative preferred stock requires that if a company misses a dividend payment, it must pay back the missed dividends before it can pay dividends to common stockholders. This makes it a safer investment than non-cumulative preferred stock.

A Preferred Stock in Which Omitted Dividend Payments Must Be