SIE practice questioneasyPreferred Stock
Which type of preferred stock allows unpaid dividends to accumulate and must be paid before common dividends?
- AConvertible preferred
- BCallable preferred
- CCumulative preferred✓ Correct answer
- DParticipating preferred
Explanation
Why C — Cumulative preferred
Cumulative preferred stock accrues unpaid dividends to be paid before common stock dividends. Other types do not have the accumulation feature.
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