Which Statement Is Correct Regarding Dividend Entitlement

question 39

Multiple Choice

Which statement is correct regarding dividend entitlement?

• A)Cumulative preferred shares do not have any rights to missed dividend payments.
• B)Non-cumulative preferred shares must be paid all missed dividend payments when dividends are declared.
• C)A corporation need only pay dividends when it declares them to be payable.
• D)A company can avoid paying dividends in arrears on cumulative preferred shares if it is to pay dividends on common shares.

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Definitions:

Market Conditions

The various factors that can affect the supply and demand for products and services, influencing their prices.

Negotiable

Pertain to something that is open to discussion or modification, especially concerning terms of an agreement or contract.

Legal Rate

The interest rate established by law that can be charged for borrowing money or the rate at which interest can be paid on a legal judgment.

Specific Rate

A particular or fixed rate that applies to a specific condition or circumstance, often used in finance and taxation.