Why Would a Corporation Issue Preferred Shares Instead of Common

question 16

Essay

Why would a corporation issue preferred shares instead of common shares,explain the advantage of this decision.

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Definitions:

Model Usefulness

The effectiveness and practicality of a theoretical model in explaining, predicting, or making decisions in real-world situations.

Operating Leverage Factor

A measure that assesses the degree to which a company can increase operating income by increasing revenue, highlighting the fixed versus variable costs structure.

Sales Revenue

The total amount of money generated from the sale of goods or services before any expenses are subtracted.

Profit Increase

The growth in profit from one period to another, often measured as a percentage increase, indicating the company's improved financial performance.