SIE practice questionhardCumulative Preferred Stock
A company has not paid dividends on its 10,000 shares of $50 par, 5% cumulative preferred for three years. How much must it pay in preferred dividends before paying any common dividend?
- A$25,000
- B$75,000✓ Correct answer
- C$15,000
- D$7,500
Explanation
Why B — $75,000
Annual preferred dividend: 10,000 × $50 × 5% = $25,000/year; missed for 3 years: 3 × $25,000 = $75,000. Other answers use the wrong computation.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Equity Securities questions
- A warrant is most likely to be exercised when the:
- ABC Corp. has 250,000 common shares at $80/share and 50,000 preferred shares at $100/share. What is ABC’s total market…
- Which tax issue is unique to holding ADRs?
- A company has $5 million in assets, $1 million in liabilities, and $500,000 in preferred stock. With 100,000 common…