Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:
A)Participating preferred stock.
B)Callable preferred stock.
C)Cumulative preferred stock.
D)Convertible preferred stock.
E)Noncumulative preferred stock.

Question

Quizplus · Accepted Answer

Noncumulative preferred stock is the preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared. Cumulative preferred stock, on the other hand, allows for the accumulation of passed over dividends to be paid out in later years. Participating preferred stock allows for participation in additional dividends beyond the stated preferred dividend rate, while callable preferred stock can be redeemed by the issuer before maturity. Convertible preferred stock can be converted into common stock at a specified price or rate.

Preferred Stock on Which the Right to Receive Dividends Is