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28 Nov 2020
The cumulative feature of preferred stock
A) limits the amount of cumulative dividends to the par value of the preferred stock.
B) requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders.
C) means that the shareholder can accumulate preferred stock until it is equal to the par value of the common stock at which time it can be converted into common stock.
D) enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.
The cumulative feature of preferred stock
A) limits the amount of cumulative dividends to the par value of the preferred stock.
B) requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders.
C) means that the shareholder can accumulate preferred stock until it is equal to the par value of the common stock at which time it can be converted into common stock.
D) enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.
Joshua StredderLv10
27 Jan 2021
Related questions
How does preferred stock accurately compare to common stock?
| A. One of the advantages to the firm associated with preferred stock financing rather than common stock financing is that dividends paid on preferred stock can be written off against earnings. | |
| B. Preferred stock provides slightly steadier and more reliable income to investors than common stock. | |
| C. One of the advantages to the firm of financing with preferred stock is that it is normally distributed only to common shareholders and requires no investment banker involvement. | |
| D. Preferred stock is much harder to value than is common stock since there are so many additional different parameters to consider when evaluating preferred stock. |
