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Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:
A. Noncumulative preferred stock.
B. Participating preferred stock.
C. Callable preferred stock.
D. Cumulative preferred stock.

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Answer:

D. Cumulative preference stock.

Explanation:

A. Non cumulative Pref stock: if preference dividend is not paid in the current year, it is forfeited.

B. Participating Pref Stocks: Holders can participate in profit sharing after receipt of fixed interest.

C. Callable Pref Stock: This are stocks that the company can redeem in between. Hence the company can redeem it at a premium.

D. Cumulative Pref Stock: The dividend are accumulated and paid anytime before payment to common stock holders.

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