Not Paying the Dividends on a Cumulative Preferred Issue May

question 16

Multiple Choice

Not paying the dividends on a cumulative preferred issue may result in:

• A)preferred dividend arrears that can be eliminated by the common shareholders only after common dividends are paid.
• B)voting rights are granted to preferred stockholders if preferred dividends are in arrears.
• C)no payment of dividends to common shareholders.
• D)Both A and B.
• E)Both B and C.

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Definitions:

Defense Mechanism

A defense mechanism is a psychological strategy unconsciously used to protect oneself from anxiety arising from unacceptable thoughts or feelings.

Anxiety-Arousing Thoughts

Internal cognitions or thoughts that trigger or increase feelings of anxiety, fear, or unease.

Reaction Formation

A defense mechanism where an individual behaves in a way that is opposite to their true feelings or desires.

Defense Mechanism

Psychological strategies deployed by individuals unconsciously to protect themselves from anxiety arising from unacceptable thoughts or feelings.