Understanding Cumulative Preferred Stock and Dividend Payments

This chapter discusses cumulative preferred stock, emphasizing its characteristics and implications for dividend payments. The calculation of preferred dividends is illustrated with an example: 8% dividend rate on a $10 par value for 20,000 shares results in annual dividends of $16,000. It explains that preferred stockholders receive their cumulative dividends, totaling $15,000, while $1,000 in arrears is noted to carry forward for future payments. The chapter highlights the differences between preferred and common stock in terms of dividend rights.

• cumulative preferred stock
• preferred dividends
• dividend payments
• stockholders rights
• preferred stock characteristics
• arrears dividends
• common vs preferred
• financial calculationstext

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