Which of the following is/are true?
I. Straight preferred equity holders to do not have a right to demand redemption.
II. Dividend payments on preferred equity are cumulative.
III. Dividends on common stock cannot be paid unless preferred dividends are paid.
IV. Preferred dividends which are in arrears are a non-recorded liability.
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A. B. C. D.B
Preferred equity is usually not redeemable, implying that preferred equity holders do not have a right to demand from the company a retirement of their equity through redemption payment. Preferred dividends that are not paid when due remain a liability, though they are not recorded as such. This leads to an understatement of liabilities since someday, these dividends must definitely be paid. In particular, the dividends in arrears are cumulative and must be paid in full before any ordinary dividends can be paid to common stockholders.