Preferred shares that are participating may:
A) Vote for the board of directors.
B) Be exchanged for common stock.
C) Receive extra cash during corporate liquidation.
D) Receive additional dividends beyond the stated amount.

Question

Quizplus · Accepted Answer

Participating preferred shares have the feature of receiving additional dividends beyond the stated amount if the company performs well enough to declare extra dividends. This is in contrast to non-participating preferred shares, which only receive dividends up to their stated rate.

Preferred Shares That Are Participating May