If preferred dividends are limited to the stated rate of dividend, the preferred stock is:

A. noncumulative
B. Cumulative
C. participating
D. Nonparticipating

Not C

Nonparticipating

D. is right i got it right

To determine which type of preferred stock has limited preferred dividends to the stated rate of dividend, we need to understand the characteristics of each type of preferred stock.

A. Noncumulative: In noncumulative preferred stock, if the company fails to pay dividends for a specific period, the missed dividends do not accrue. The shareholders are only entitled to receive the stated rate of dividend for the current period. Therefore, noncumulative preferred stock does limit the preferred dividends to the stated rate of dividend. However, this option is not the correct answer yet.

B. Cumulative: In cumulative preferred stock, if the company fails to pay dividends for a specific period, the missed dividends accrue and must be paid to the shareholders before any common dividends can be paid. Therefore, cumulative preferred stock is not limited to the stated rate of dividend and is not the correct answer to our question.

C. Participating: Participating preferred stock allows shareholders to receive additional dividends on top of the stated rate of dividend if the company exceeds certain profit thresholds. This type of stock does not limit the preferred dividends to the stated rate of dividend and is not the correct answer.

D. Nonparticipating: Nonparticipating preferred stock only entitles shareholders to receive the stated rate of dividend. Additional dividends are not available even if the company exceeds certain profit thresholds. Therefore, nonparticipating preferred stock does limit the preferred dividends to the stated rate of dividend.

Based on the above explanations, the correct answer is D. Nonparticipating.