What Is Cumulative Preferred Stock

question 177

Multiple Choice

What is cumulative preferred stock?

• A) By law,the preferred stock cannot pay dividends out every year.
• B) Preferred shareholders vote whereas common shareholders do not.
• C) This stock's dividend payments are automatically reinvested into the firm,thus allowing for compounding the return on investment.
• D) If dividend payments are missed in one year,they are paid later and are paid before any common stock dividends.
• E) Cumulative preferred shareholders have the right to purchase shares of a new stock issue before it is offered to the general public.

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