Finance · Cumulative Preferred Stock
What provision is attached to cumulative preferred stock regarding omitted or skipped dividends?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The company is liquidated immediately if a single quarterly dividend is skipped.
- 2All dividends in arrears must be fully paid before any dividends can be paid on common stock.✓
- 3Omitted dividends automatically convert into voting equity shares with double voting weight.
- 4Omitted dividends are permanently forfeited and can never be claimed by shareholders.
Correct answer
All dividends in arrears must be fully paid before any dividends can be paid on common stock.
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