Final answer:
Dividends for participating preferred stock have a fixed minimum but not a fixed maximum, providing a guaranteed dividend payment with the potential for additional earnings from excess profits.
Step-by-step explanation:
The question refers to the dividends paid on participating preferred stock. The dividends for a participating preferred stock would typically have a fixed minimum but not a fixed maximum. This means that participating preferred shareholders are guaranteed to receive a minimum dividend, often at a fixed rate, and they may also receive additional dividends if the company performs well and decides to pay more than the stated minimum.
Preferred stock holders have priority over common stockholders when it comes to dividend payments, which makes preferred dividends generally safer. However, with participating preferred stock, there's an added advantage that if the company has excess profits, preferred shareholders could benefit beyond the fixed rate. Therefore, the correct answer to the question is: a. minimum but not a maximum.