SIE Exam Question 535: Answer and Explanation

Question: 535

Which of the following is a type of preferred stock that gives the investor the right to receive dividends equal to the normally specified rate, as well as an additional dividend based on a specific predetermined condition?

• A. Accumulating preferred stock
• B. Dividend preferred stock
• C. Non-participating preferred stock
• D. Participating preferred stock

Correct Answer: D

Explanation:

Participating preferred stock gives the investor the right to receive dividends equal to the normally specified rate, as well as an additional dividend based on a specific predetermined condition.