Which of the Following Is a Correct Statement About Cumulative

question 89

Multiple Choice

Which of the following is a correct statement about cumulative and noncumulative preferred stock?

• A)They both receive dividends in arrears.
• B)Cumulative stock's undeclared dividends accumulate each year until paid while noncumulative stock's right to receive dividends is forfeited in any year that dividends are not declared.
• C)Cumulative preferred stock is guaranteed to receive its dividends.
• D)Cumulative preferred stock's right to receive dividends is forfeited in any year that dividends are not declared while noncumulative stock's undeclared dividends accumulate each year until paid.

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Definitions:

Voidable Option

A contract provision that allows one party to void the contract under certain circumstances, making it enforceable at the discretion of one party.

Status Quo

The existing state of affairs or current condition or situation, which is often maintained or referred to in discussions of change.

Contract Creation

The process of forming an agreement between parties that is legally enforceable.

Disaffirm

To express denial or contradiction of a previous statement, belief, or agreement.