Preferred stock that provides for dividend payments based on certain formulas allowing preferred stockholders to participate with common stockholders in the receipt of dividends beyond a specified amount is called cumulative preferred stock.

Question

Quizplus · Accepted Answer

Cumulative preferred stock refers to the accumulation of unpaid dividends, not participation in additional dividends. The correct term for preferred stock that allows participation with common stockholders is "participating preferred stock."

Preferred Stock That Provides for Dividend Payments Based on Certain