Cumulative preferred stock carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to common shareholders.

Question

Quizplus · Accepted Answer

Cumulative preferred stock is a type of preferred stock that has the right to accumulate unpaid dividends in the event that the company does not pay them when due. This means that before any dividends are paid to common shareholders, the company must first pay all current and past unpaid dividends to cumulative preferred stockholders.

Cumulative Preferred Stock Carries the Right to Be Paid Both