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What Is the Difference Between Cumulative and Non-Cumulative Preferred Shares

Question 1

Multiple Choice

What is the difference between cumulative and non-cumulative preferred shares?


A) Cumulative preferred share's right to receive dividends is forfeited in any year that dividends are not declared. However, noncumulative preferred shares' undeclared dividends accumulate each year until paid.
B) Cumulative does not receive dividends but noncumulative does.
C) They both receive dividends in arrears.
D) Cumulative preferred shares' undeclared dividends accumulate each year until paid, while non-cumulative preferred shares' right to receive dividends is forfeited in any year that dividends are not declared.

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