Preferred Stock Is NOT Similar to Debt Because

question 149

Multiple Choice

Preferred stock is NOT similar to debt because:

• A)preferred dividends are not tax-deductible whereas interest expense is tax-deductible.
• B)preferred dividends do not have to be paid whereas interest expense must be paid.
• C)preferred stock does not have a maturity date whereas debt usually has a maturity date.
• D)all of the above.

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Definitions:

Assumption of Risk

A legal doctrine stating that an individual knowingly and voluntarily assumes the risk of an activity, thereby relieving another party from liability for harm caused during the activity.

Assumption of the Risk

A defense in tort law where the plaintiff is considered to have voluntarily assumed the risks of a known hazard, diminishing the defendant's liability.

Contributory Negligence

A defense to negligence whereby the defendant can escape all liability by proving that the plaintiff failed to act in a way that would have protected him or her from an unreasonable risk of harm and that the plaintiff’s negligent behavior contributed in some way to the plaintiff’s accident.

Defendants Liability

The legal obligation of a defendant in a lawsuit to compensate for harm caused to the plaintiff as determined by a court judgment or settlement.