SIE practice questionmediumPreferred Stock
A company skips its preferred dividend payment for two years and then resumes payments. Which type of preferred shareholders will receive all missed dividends before common shareholders can be paid?
- AParticipating preferred
- BConvertible preferred
- CCumulative preferred✓ Correct answer
- DCallable preferred
Explanation
Why C — Cumulative preferred
Cumulative preferred shareholders must receive past missed dividends before any common dividends. The other types do not guarantee payment of skipped dividends.
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.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Equity Securities questions
- On the ex-dividend date, what adjustment typically occurs to the stock's price?
- Which risk is unique to holders of ADRs compared to holders of domestic U.S. stocks?
- Which statement is TRUE regarding book value per share?
- A shareholder owns 200 shares of a company's common stock. In an election for three board members, if cumulative voting…
- Shareholders receiving rights can do which of the following?
- A company with 1 million shares outstanding announces a 3-for-2 stock split. How many shares will be outstanding after…
- If a stock trades at $60 and has earnings per share of $4, what is its P/E ratio?
- A company may redeem (buy back) callable preferred stock: