Question

To which of the following rights is a holder of a public corporation's cumulative preferred stock always entitled?

A) Voting rights
B) Dividend rights
C) Board representation
D) Liquidation preference

Answer 1

A holder of a public corporation's cumulative preferred stock is always entitled to dividend rights.

Step-by-step explanation:

A holder of a public corporation's cumulative preferred stock is always entitled to dividend rights.

Preferred stock is a type of stock that generally pays a fixed dividend, regardless of the company's profitability. Cumulative preferred stock, specifically, means that if the company does not pay a dividend in any given year, the unpaid dividends accumulate and must be paid before any dividends can be paid to common stockholders.

The holder of a public corporation's cumulative preferred stock is always entitled to dividend rights. Cumulative preferred stock is a type of equity security that provides a preferential right to receive dividends before common stockholders. If the dividends cannot be paid, they will accumulate until they can be, hence the term cumulative.