How does "cumulative" preferred stock work for the investor? Question 48 options: Cumulative means the investor is more likely to receive the stated dividend rate before any dividend is paid to common shareholders. Corporation does not have to pay this dividend. Preferred shareholders may elect to defer receiving dividend and allow it to accumulate. Dividend rate multiplies every year.
Added by Sherill G.
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Cumulative preferred stock guarantees that if a company cannot pay a dividend in any given year, it accumulates and must be paid out before any dividends are paid to common shareholders in the future. This is what "cumulative" means in this context. Show more…
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