Why Do Companies Tend to Issue Preferred Stock Less Then

question 84

Multiple Choice

Why do companies tend to issue preferred stock less then commons stock and bonds?

• A) Flotation cost of preferred stock is low compared to bonds.
• B) Preferred dividends are considered regular (fixed)obligations but are not tax-deductible.
• C) Preferred shareholders are entitled to receive stipulated dividends before common shareholders.
• D) Preferred stock typically has cumulative dividends.

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Definitions:

Left Hemisphere

The left side of the brain, known for controlling speech, comprehension, arithmetic, and writing.

Visual-spatial Abilities

Cognitive skills that enable a person to process and interpret visual information about where objects are in space, including abilities related to visual perception, spatial orientation, and mentally manipulating objects.

Producing Language

The process of using words, symbols, and grammar to convey meaning and communicate with others.

Right Hemisphere

the half of the brain that controls the left side of the body, often associated with creativity, spatial ability, and facial recognition.