Assume a Company's Preferred Stock Is Cumulative with a Call

question 37

Multiple Choice

Assume a company's preferred stock is cumulative with a call provision and has dividends in arrears.The amount of stockholders' equity allocated to preferred stockholders is equal to the number of shares outstanding times the

• A)sum of the par value per share plus any liquidation premium per share,plus the sum of any preferred dividends in arrears,plus the current year's dividend requirement,but only if dividends have been declared.
• B)sum of the par value per share,plus any liquidation premium per share,plus the sum of any preferred dividends in arrears,plus the current year's dividend requirement,regardless of whether dividends have been declared.
• C)call price plus the sum of any preferred dividends in arrears,plus the current year's dividend requirement,but only if dividends have been declared.
• D)call price plus the sum of any preferred dividends in arrears,plus the current year's dividend requirement,regardless of whether dividends have been declared.

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Definitions:

Tacit Agreement

An understanding or agreement that is implied from actions or circumstances, not explicitly stated.

Implied Warranty

An unwritten and unspoken guarantee that a product will meet a minimum level of quality and reliability.

Negligent

Failing to take proper care in doing something, often leading to harm or damage.

Public Policy

Principles and standards considered to be in the interest of the general public and used as a guide for legislative or judicial action.