How Is Preferred Stock Similar to Bonds

question 121

Multiple Choice

How is preferred stock similar to bonds?

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

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Definitions:

Vested

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