A firm that fails to pay dividends on its preferred stock is said to be _________.
A) insolvent
B) in arrears
C) insufferable
D) delinquent

Question

Quizplus · Accepted Answer

When a firm fails to pay dividends on its preferred stock, it is said to be "in arrears." This means that the firm has missed one or more dividend payments, and it now owes those dividends to the preferred stockholders before paying any dividends to common stockholders. The other choices (insolvent, insufferable, delinquent) do not accurately describe the situation of a firm that has failed to pay dividends on preferred stock.

A Firm That Fails to Pay Dividends on Its Preferred