(Q29 IN TYPE B)BANK OF MONTREAL HAD FALLEN UPON HARD TIMES DUE TO...

29. (Q29 in Type B)Bank of Montreal had fallen upon hard times due to a rogue trader and dividends on their non-cumulative, preferred stock were not paid for three years. They are now able to resume the dividend payments. Which of the following is true? A) Common shareholders must now receive three years' worth of dividends. B) Preferred shareholders must now receive three years' worth of dividends. C) The corporation must close if preferred shareholders are not paid. D) Common shareholders have not received dividends for three years. Solution: D. If a company omits the dividend on preferred stock, it must also omit the dividend on common stock. Because the preferred shares are non-cumulative, the company does not need to pay out the last three years of dividends.