Preferred stockholders share with common stockholders in any "extra" dividends when the preferred stock is
A)cumulative
B)callable
C)participating
D)convertible

Question

Quizplus · Accepted Answer

Preferred stockholders share in extra dividends when the preferred stock is participating. This means that they receive their stated dividend plus an additional dividend if the company has extra profits to distribute. Cumulative preferred stockholders have the right to receive any missed dividends in the future before common stockholders, but this does not necessarily mean they will receive extra dividends. Callable and convertible preferred stocks refer to the ability of the company or the shareholder to call or convert their shares, respectively, and do not directly relate to sharing in extra dividends.

Preferred Stockholders Share with Common Stockholders in Any "Extra" Dividends