The ________ feature found with many issues of preferred stock requires that all current and past due preferred dividends must be paid prior to any dividend payout to common shareholders.
A)cumulative
B)participating
C)convertible
D)historical

Question

Quizplus · Accepted Answer

The feature being described is the cumulative feature, which means that all missed dividends must be paid to preferred shareholders before common shareholders can receive a dividend. The participating feature would allow preferred shareholders to receive additional dividends beyond their fixed rate, while the convertible feature allows preferred shares to be converted into common shares. The historical feature is not a term used in the context of preferred stock.

The ________ Feature Found with Many Issues of Preferred Stock