SIE Exam Question 843: Answer and Explanation

Question: 843

If a corporation is required to pay unpaid dividends from prior years before paying a dividend to common stockholders, the stock is considered to be:

• A. accumulated preferred stock.
• B. convertible stock.
• C. cumulative preferred stock.
• D. preferred stock.

Correct Answer: C

Explanation:

If a corporation is required to pay unpaid dividends from prior years before paying a dividend to common stockholders, the stock is considered to be cumulative preferred stock.