Preferred stock that allows preferred stockholders to share with common stockholders any dividends paid in excess of the percent or dollar amount stated on the preferred stock is called:

A) Convertible preferred stock.
B) Participating preferred stock.
C) Premium stock.
D) Cumulative preferred stock.
E) Common stock.

Participating Preferred Stock

A type of preferred stock that provides dividends and an additional right to participate in the excess profits of the company after the common stock dividends have been paid.

Convertible

Refers to a financial instrument, like a bond or share, that can be transformed into another form of financial asset, like shares of the company's stock.

Dividends Paid

Dividends paid refer to the portion of a company's earnings that is distributed to shareholders as a reward for their investment.