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EyeCare Corporation issued 10,000 shares of 7%, $100 par value preferred stock at the beginning of Year 1. The company did not pay dividends in Year 1. However, preferred stockholders received dividends for Year 1 and Year 2, when the company declared dividends in Year 2. Preferred stockholders also have the option, under specified conditions, to return their shares for a predetermined price. Which of the following features are in present the preferred stock issued by EyeCare?

Select all answers that apply to this question.

a. Convertible
b. Redeemable
c. Cumulative
d. Noncumulative

Respuesta :

Nyctalus

Answer: Option B and C

           

Explanation: Redeem is broader than ransom in its use, and it means buying back, regaining ownership or exchanging money, goods, etc. On the other hand cumulative stock refers to the stock in which the shareholders gets any pending dividend along with the current dividend, when the company declares it, before any distribution to equity shareholder.

Hence from the above we can conclude that the stock described in the given case are redeemable and cumulative.

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