Question
1.The Anna Company has 100,000 shares of common stock outstanding with a $10 per share par value. In addition, the company has 20,000 shares of
1.The Anna Company has 100,000 shares of common stock outstanding with a $10 per share par value. In addition, the company has 20,000 shares of preferred stock outstanding with a $100 par value. On this preferred stock, there is a 4 percent annual dividend that is cumulative. What does the term "cumulative" mean in this situation?
If the preferred stock dividend is not paid in one year, it must be paid the following year.
If the preferred stock dividend is not paid in one year, an additional (or penalty) dividend must be paid in the subsequent period
The current and any missed dividends must be paid on the preferred stock shares before any dividends can be paid to the owners of the common stock
The preferred stock dividend must be paid each year
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