If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders?
A) The must forgo dividends for any periods when no dividends are declared
B) They have the right to receive current-year dividends and all unpaid dividends from prior years.
C) They will receive a fixed dividend each year regardless of the amount of dividends declared.
D) They will have an option to convert their shares to common stock at a specified date.
Answer: B
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