A Cumulative Dividend Preference Means That

Multiple Choice

A cumulative dividend preference means that:

A) preferred shareholders are paid dividends before common shareholders are paid dividends for the current year only.
B) unpaid dividends to preferred shareholders accumulate and must be paid before common shareholders receive dividends.
C) preferred shareholders are paid their full fixed dividend rate each period as long as the company is in operation.
D) unpaid cash dividends to preferred shareholders must be replaced with stock dividends during the current period.