Preferred Stock Is Often Referred to as a Hybrid Security

question 1

Multiple Choice

Preferred stock is often referred to as a hybrid security for which of the following reasons?

• A)Preferred stock dividends are fixed like bond payments but the maturity is indefinite like common stock.
• B)Preferred stockholders have preference over common stock holders in bankruptcy,but are subordinate to bondholders.
• C)Both A and B are typically true.
• D)Neither A nor B are typically true.

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