Question

Preferred stock can best be characterized as: Equity Debt Retained Earnings A security that pays a...

Preferred stock can best be characterized as:

Equity

Debt

Retained Earnings

A security that pays a fixed dividend like debt, but is subject to non payment like equity. A preferred shareholder cannot force a firm into bankruptcy if the firm fails to pay the dividend.

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Answer #1

Preferred stock:

It pays a fixed dividend like debt (higher preference over common share holder) but is subject to non payment like equity.

It also behave like equity as shareholder cannot force a firm into bankruptcy if the firm fails to pay the dividend.

Hence, the last option is correct.

Kindly do inform me in case you have any queries.

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