Question 17 (of 25) 7. A cumulative dividend preference means that preferred sha

Question

Question 17 (of 25) 7. A cumulative dividend preference means that preferred shareholders are paid dividends before common shareholders are paid dividends for the current year only O unpaid dividends to preferred shareholders accumulate and must be paid before common shareholders receive dividends. O preferred shareholders are paid their full fixed dividend rate each period as long as the company is in operation. O unpaid cash dvidends to preferred shareholders must be replaced with stock dividends during the current period. O Type here to search

Explanation / Answer

Answer

B. Unpaid dividends to preferred shareholders accumulate and must be paid before common shareholders receive dividend.

Explanation: Preference shareholders always have a preference to receive dividends before any dividend is paid to common shareholders.

Cumulative preference shares are that type of preference share in which, dividends keep on accumulating till the time it is not paid. If in any year , dividend is not paid to this class of share, dividend will accumulate and will be paid in next year along with dividend of that year .

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.