SIE practice questionhardParticipating Preferred Stock
Which benefit may participating preferred shareholders receive not provided by most other preferred stockholders?
- AGuaranteed redemption at a premium
- BA share in excess earnings distributed as extra dividends✓ Correct answer
- CMandatory conversion to common stock
- DHigher regular dividend yield
Explanation
Why B — A share in excess earnings distributed as extra dividends
Participating preferred can share in additional dividends. Other preferred types typically lack this benefit.
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