Question

A firm that fails to pay dividends on its preferred stock is said to be
(A) insolvent
(B) in arrears
(©) in sufferable
D) delinquent​

Answer 1

Noncumulative preferred stock refers to the preferred stock shares which usually have dividends starting all over in every year. In case the company fails to pay dividends in one year, the dividends will not accumulate in arrears.

Answer 2

Noncumulative preferred stock refers to the preferred stock shares which have dividends that are starting all over every year. If the company fails to pay the dividends in one year, the dividends will not be accumulated in arrears.