Which of the Following Securities Guarantees Preferred Stockholders Payment of Missed

question 166

Multiple Choice

Which of the following securities guarantees preferred stockholders payment of missed dividends before any dividends are paid to common stockholders?

• A) Call provision
• B) Cumulative preferred
• C) Participating preferred
• D) Convertible preferred

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Definitions:

Discount Rate

The interest rate charged by central banks on loans to commercial banks or the rate used in discounted cash flow analysis to determine present value.

Simple Interest

Interest determined strictly on the base amount, or on the unpaid segment of that base amount.

Term Deposit

A deposit held at a financial institution for a fixed term that offers a fixed interest rate, where withdrawing money before the term ends usually incurs a penalty.

Bookkeeper

A person responsible for recording the financial transactions and maintaining the financial records of a business.