How is preferred stock similar to bonds? Investors can sue the firm if preferred
ID: 2637116 • Letter: H
Question
How is preferred stock similar to bonds?
Investors can sue the firm if preferred dividend payments are not paid (much like bondholders can sue for non-payment of interest payments).
Preferred stock is not like bonds in any way.
Preferred stockholders receive a dividend payment (much like interest payments to bondholders) that is usually fixed.
Dividend payments to preferred shareholders (much like bond interest payments to bondholders) are tax deductible.
A.Investors can sue the firm if preferred dividend payments are not paid (much like bondholders can sue for non-payment of interest payments).
B.Preferred stock is not like bonds in any way.
C.Preferred stockholders receive a dividend payment (much like interest payments to bondholders) that is usually fixed.
D.Dividend payments to preferred shareholders (much like bond interest payments to bondholders) are tax deductible.
Explanation / Answer
Preferred stockholders receive a dividend payment (much like interest payments to bondholders) that is usually fixed.
C.Preferred stockholders receive a dividend payment (much like interest payments to bondholders) that is usually fixed.