Stocks for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

Question

Quizplus · Accepted Answer

Cumulative preferred stocks require any missed dividend payments to be paid in the future to preferred shareholders before common shareholders can receive any dividends. Noncumulative preferred stocks do not require missed dividend payments to be paid in the future, while common stocks do not offer a fixed dividend payment. Participating preferred stocks allow preferred shareholders to receive additional dividends along with common shareholders if the company performs well. However, cumulative preferred stocks specifically require missed dividend payments to be paid in the future, making them the correct answer for this question.

Stocks for Which Any Missed Dividend Payments Must Be Paid