The WaterGlove Corporation issues ________ preferred stock that requires payment of a quarterly dividend of $5.00 per share. The WaterGlove Corporation falls behind with four quarterly payments, i.e., $20.00 per share of preferred stock. The next quarter, the corporation makes a profit of $25.00 per share. The corporation must pay $20.00 per share of arrearages to the preferred shareholders plus this quarter's payment of $5.00 per share.

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Cumulative preferred stock requires the payment of all missed dividends before paying dividends to common stockholders. In this scenario, the WaterGlove Corporation fell behind on their quarterly payments, meaning they have arrearages that must be paid before any new dividends can be distributed. This requirement is consistent with cumulative preferred stock.

The WaterGlove Corporation Issues ________ Preferred Stock That Requires Payment