Preferred stock may be desirable to issue for which of the following reason(s)?
ID: 2779441 • Letter: P
Question
Preferred stock may be desirable to issue for which of the following reason(s)?
If there is no taxable income, preferred stock does not impose a tax penalty.
The failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.
Preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.
Both the failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy; and preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.
Both if there is no taxable income, preferred stock does not impose a tax penalty; and the failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.
Explanation / Answer
Preferred stock may be desirable to issue for the following reasons : the last option
Both if there is no taxable income, preferred stock does not impose a tax penalty; and the failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.