Preferred Stock Is Sometimes Treated Like a Debt Security Because

question 71

Multiple Choice

Preferred stock is sometimes treated like a debt security because:

• A) legally preferred stock is a debt security.
• B) preferred dividend payments are similar to bond interest payments and are fixed in nature regardless of the firm's earnings.
• C) preferred dividends are deductible from taxable income just like interest payments on bonds.
• D) preferred stock holders receive a residual value and not a stated value.

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