Preferred stock that confers rights to prior periods' unpaid dividends even if they were not declared is called:
A)Noncumulative preferred stock.
B)Participating preferred stock.
C)Callable preferred stock.
D)Cumulative preferred stock.
E)Convertible preferred stock.

Question

Quizplus · Accepted Answer

Cumulative preferred stock gives the holder the right to receive all past unpaid dividends before any dividends can be paid to common stockholders. This means that if a company misses or defers a dividend payment, the cumulative preferred shareholders have the right to receive those dividends before any dividends are paid to common shareholders, even if the company does not declare the dividends.

Preferred Stock That Confers Rights to Prior Periods' Unpaid Dividends