A company that has issued cumulative preferred stock:
A) pays the current dividends on the preferred, but not the past dividends on the preferred, before paying a dividend on the common.
B) forces conversion of the preferred that is trading at a discount to par, thereby eliminating the need to pay past-due dividends.
C) pays past and current preferred dividends before paying dividends on common stock.
D) pays the preferred dividend before paying the coupons due on its outstanding bonds.
Answer: C) pays past and current preferred dividends before paying dividends on common stock.