If a Preferred Stock Is of the Cumulative Type

question 17

Multiple Choice

If a preferred stock is of the cumulative type,:

• A) the dividends must be paid on an equal basis with common so long earnings permit.
• B) the dividends cannot be passed if they are not earned.
• C) the cumulative voting rule applies in the exercise of the voting privilege.
• D) unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common shareholders.

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