Preferred stock is considered to be non-participating when:

A) preferred stockholders get their yearly dividend and the remainder goes to common stockholders.
B) preferred stockholders have a right to the current year's dividend, but do not receive holdovers from past years when dividends were not paid.
C) preferred stockholders have a right to a certain dividend every year.
D) None of these answers is correct.

Question

kapindra Sharma · Accepted Answer

Final Answer : A, Explanation :  Non-participating preferred stock means that preferred stockholders are entitled to their fixed dividend, and any excess profits are distributed to common stockholders.

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