Cumulative preferred stock guarantees an investor that if preferred dividends are not paid, then all unpaid dividends will accumulate and be paid in full before any interest is paid to bondholders or common stockholders.

Question

Quizplus · Accepted Answer

Cumulative preferred stock guarantees that unpaid dividends will accumulate and be paid before any dividends are paid to common stockholders, but bondholders have a higher claim on assets and interest payments than preferred stockholders.

Cumulative Preferred Stock Guarantees an Investor That If Preferred Dividends