Practicing Success
Practicing Success
CUET Preparation Today
| Which one has the feature of recovering arrears of dividends? |
Equity shares Participating preference shares Cumulative preference shares Non- Cumulative preference shares |
| Cumulative preference shares |
| Cumulative preferred stock includes a provision that requires the company to pay shareholders all dividends, including those that were omitted in the past, before the common shareholders are able to receive their dividend payments. These dividend payments are guaranteed but not always paid out when they are due. Unpaid dividends are assigned the moniker "dividends in arrears" and must legally go to the current owner of the stock at the time of payment. At times additional compensation (interest) is awarded to the holder of this type of preferred stock. |
