Preferred stock offers the issuing corporation and investors advantages and disadvantages. Which of the following statements describes an advantage for the issuer of preferred stock?
a. Choosing to not pay a preferred dividend payment will not lead the firm to bankruptcy.
b. The after-tax cost of preferred stock is higher than the after-tax cost of debt.

Question

06-12-2022
Business

Answered

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Preferred stock offers the issuing corporation and investors advantages and disadvantages. Which of the following statements describes an advantage for the issuer of preferred stock?
a. Choosing to not pay a preferred dividend payment will not lead the firm to bankruptcy.
b. The after-tax cost of preferred stock is higher than the after-tax cost of debt.

Sagot :

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SidHussain SidHussain · Answer 1 · 2022-12-13T09:08:21-05:00

The statement that describes an advantage for the issuer of preferred stock is a. Choosing to not pay a preferred dividend payment will not lead the firm to bankruptcy.

It is upon the company to understand to invest money in which stocks and which not.

A company will not lead to bankruptcy if it decides to not pay a preferred divident.

In the field of business, divident can be descirbed as a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).

To learn more about dividend, click here:

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