Which of the following are the advantages of issuing preferred stock over debt? More than one answer may be correct. Multiple select question. Preferred dividends are non-taxable, whereas interest income is taxable. Preferred shareholders cannot force a corporation into bankruptcy because of unpaid dividends. Firms issuing preferred stock can avoid the threat of bankruptcy. Unpaid preferred dividends are not debts of a corporation. Preferred dividend increases the earnings per share (EPS) of a firm, whereas interest on debt decreases the EPS of a firm.

Which of the following are the advantages of issuing preferred stock over debt? More than one answer may be correct. Multiple select question. Preferred dividends are non-taxable, whereas interest income is taxable. Preferred shareholders cannot force a corporation into bankruptcy because of unpaid dividends. Firms issuing preferred stock can avoid the threat of bankruptcy. Unpaid preferred dividends are not debts of a corporation. Preferred dividend increases the earnings per share (EPS) of a firm, whereas interest on debt decreases the EPS of a firm.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 6P

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A corporation that is not taxable issues preferred stock to lower their financing costs because Blank______. Multiple choice question. preferred dividends are non-taxable, whereas interests are taxable preferred dividends are significantly lower than interest payments a new issue of preferred stock does not affect the debt-to-equity ratio of the firm a new issue of preferred stock decreases the total equity of the firm
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Which of the following statements are true of preferred dividends? More than one answer may be correct. Multiple select question. Preferred dividends are like interest on a bond. Companies have no obligation to pay the dividends on preferred shares. Directors elected by common shareholders cannot defer preferred dividends indefinitely. Unpaid preferred dividends are not debts of the firm
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Which of the following statements are true of preferred dividends? More than one answer may be correct. Multiple select question. Directors elected by common shareholders cannot defer preferred dividends indefinitely. Unpaid preferred dividends are not debts of the firm. Preferred dividends are like interest on a bond. Companies have no obligation to pay the dividends on preferred shares.
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