Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:
A)Cumulative preferred stock.
B)Callable preferred stock.
C)Participating preferred stock.
D)Convertible preferred stock.
E)Preferential preferred stock.

Question

Quizplus · Accepted Answer

Participating preferred stock allows preferred stockholders to receive their stated dividend and share in any excess dividends with common shareholders. Cumulative preferred stock means any unpaid dividends accumulate and must be paid before common shareholders can receive any dividends. Callable preferred stock means the issuer has the option to buy back the stock from shareholders at a predetermined price. Convertible preferred stock can be converted into common stock at a specified conversion rate. Preferential preferred stock is not a commonly used term in finance.

Preferred Stock with a Feature Allowing Preferred Stockholders to Share