Question

Preferred stock that has the right to prior periods' unpaid dividends even if they were not declared is called:

Answer 1

cumulative preferred stocks

Step-by-step explanation:

There are several ways in which you can classify preferred stocks, and one of the most important ones is cumulative or non-cumulative.

• Cumulative preferred stocks are entitled to past dividends if by some reason they weren't paid by the corporation. E.g. last year no dividends were distributed, but this year preferred stockholders will receive two payments.
• Non-cumulative preferred stocks are not entitled to past dividends if they were not paid in their specific period. E.g if last year no dividends were declared, then they are lost and will not be paid in the future.