Which Statement About Dividends Is Correct

question 16

Multiple Choice

Which statement about dividends is correct?

• A)Dividends on cumulative preferred shares are not discretionary payments.
• B)Dividends are mandatory payments required for both common and preferred shares.
• C)Dividends are discretionary payments that can be made for common and preferred shares.
• D)Dividends must be paid on common shares before dividends can be paid on preferred shares.

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Definitions:

Distributive Property

A property indicating that the multiplication of a number by a sum is equal to the sum of the individual multiplications, represented as \(a(b + c) = ab + ac\).

Additive Inverse Property

A principle stating that for any real number, there exists another real number that, when added together, equals zero.

Distributive Property

A property indicating that multiplying a sum by a number gives the same result as multiplying each addend by the number and then adding the products.

Principal Investment

The initial amount of money invested, before any earnings or interest.