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