Question

13 --A preferred issue that will repay any arrearage on its dividends will have the following...

13 --A preferred issue that will repay any arrearage on its dividends will have the following term on the certificate.______________________.

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Answer #1

Preferred stock is a type of preferred stock with a provision that stipulates that if any dividend payments have been missed in the past, the dividends owed must be paid out to cumulative preferred shareholders first. This is before other classes of preferred stock shareholders and common shareholders can receive dividend payments. Cumulative preferred stock is also called cumulative preferred shares.

Cumulative preferred stock is one type of preferred stock; a preferred stock typically has a fixed dividend yield based on the par value of the stock. This dividend is paid out at set intervals, usually quarterly, to preferred holders. Preferred stocks are valued similarly to bonds. Bond proceeds are considered to be a liability, while preferred stock proceeds are counted as an asset. Also, bondholders have a priority claim on company assets.

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