If a Preferred Stock Is of the Cumulative Type

question 54

Multiple Choice

If a preferred stock is of the cumulative type,

• A) dividends must be paid on an equal basis with common stock, so long as earnings permit.
• B) dividends cannot be passed if they are earned.
• C) dividends must be paid, and if not a liability is created.
• D) unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common stockholders.

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Definitions:

Living Will

A legal document that records a person's wishes regarding medical treatment in circumstances where they are unable to express informed consent.

Quality of Life

A measure of the general well-being of individuals and societies, encompassing not only wealth and employment but also the built environment, physical and mental health, education, recreation and leisure time, and social belonging.

Sanctity of Life

The belief or doctrine that life is sacred and inviolable, often grounded in religious or moral principles, highlighting the importance of preserving life.

Financial Security

The state of having stable income or other resources to support a standard of living now and in the foreseeable future.