When a preferred stock is "participating", it means that:

A.Preferred stockholders may be entitled to payments above the normal level of dividends in certain situations.

B.The prices of preferred stocks will go up faster than the firm's common stock.

C.Preferred stocks may be exchanged at a predetermined rate for common stock of the same corporation at the discretion of the preferred stockholder.

D.The preferred dividends may be eroded by inflation.