A company has $4 cumulative preferred stock outstanding and has not paid dividends for 2 years. Before common stockholders can receive any dividend, the company must pay preferred shareholders:

Why D — $12 per share

Cumulative preferred stock requires that all unpaid (accumulated) dividends must be paid before any dividends can be paid to common stockholders. The arrearage is $4 x 2 years = $8, plus the current year's $4 dividend, totaling $12 per share that must be paid before common stockholders receive anything.