Maneesh 02 May 2020 at 13:27 PM

One reason that a financial manager may prefer to issue preferred stock rather than debt is because:

A) The cost of fixed debt is less expensive since it is tax-deductible even if a sinking fund is required to retire the debt

B) In a legal sense, preferred stock is equity; therefore, dividend payments are not legal obligations.

C) The preferred dividend is often cumulative, whereas interest payments are not

D) Payments to preferred stockholders are not considered fixed payments

Reply this

FACULTY 13 May 2020 at 02:00 PM

n a legal sense, preferred stock is equity; therefore, dividend payments are not legal obligations.(option B)

Reply this