A protective feature on preferred stock that requires preferred dividends previously not paid to be disbursed before any common stock dividends can be paid is called what?
A) cumulative dividends
B) callable dividends
C) putable dividends
D) historical dividends
E) paid dividends

Question

Quizplus · Accepted Answer

Cumulative dividends are a protective feature on preferred stock where if the company fails to pay a dividend in a particular year, the dividend accumulates and must be paid before any dividends can be paid to common stockholders. This ensures that preferred stockholders receive their dividends before any dividends are paid to common stockholders.

A Protective Feature on Preferred Stock That Requires Preferred Dividends