Most preferred stock

Question

Quizplus · Accepted Answer

Cumulative dividends mean that if a company is unable to pay dividends for a certain period, the missed payments will accrue and become payable once the company can afford it. This makes preferred stockholders more secure in their investment and typically more attractive to investors. Choice B is incorrect because variable dividends would not make preferred stock more attractive to investors. Choice C is incorrect because preferred stock typically does not allow voting rights. Choice D is incorrect because preferred stock is not necessarily only purchased by individual investors.

Most Preferred Stock