SIE (Securities Industry Essentials) Practice Exam

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What must be paid to preferred stockholders before any common dividend can be paid, given a lack of full preferred dividends in the past two years?

$5.00 per share
$10.00 per share
$7.00 per share
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The correct answer is: $10.00 per share

Preferred stockholders are given priority in receiving dividends before common stockholders. This means that in the given scenario, any unpaid preferred dividends from the past two years must be paid to preferred stockholders before any common dividends can be paid. Option B, $10.00 per share, indicates a higher payment than the other options, making it the correct answer. Options A and C offer lower amounts and option D is incorrect as preferred stockholders must be paid before common stockholders.