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:

≠ Symbol

A mathematical symbol indicating that two values are not equal.

Two-tailed

A type of statistical test that is designed to consider both directions of effect or difference, allowing for the exploration of relationships in both positive and negative directions.

Alternative Hypothesis

The hypothesis that proposes a statistical significance exists or that there is an observed effect in a study.

µ ≠ 3

A statistical notation indicating the hypothesis that the population mean is not equal to 3.