A cumulative dividend preference means that:
A)preferred stockholders are paid dividends before common stockholders are paid dividends for the current year only.
B)unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends.
C)preferred stockholders are paid their full fixed dividend rate each period as long as the company is in operation.
D)unpaid cash dividends to preferred stockholders must be replaced with stock dividends during the current period.

Question

Quizplus · Accepted Answer

A cumulative dividend preference is the preferred stock feature that requires current dividends not paid in full to accumulate for every year in which they are not paid.
These cumulative unpaid amounts (called dividends in arrears)must be paid before any common dividends can be paid.

A Cumulative Dividend Preference Means That