Although preferred stock provides added financial leverage in much the same way as bonds, it differs from bonds in that the issuer can pass a dividend payment without suffering the consequences of that result when an interest payment is missed on a bond.

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This statement is true. If a company misses a dividend payment on preferred stock, it does not trigger the same consequences as missing an interest payment on a bond. The issuer of preferred stock does not face default or bankruptcy if a dividend payment is missed. However, missing multiple dividend payments can still harm the issuer's reputation and ability to raise capital in the future.

Although Preferred Stock Provides Added Financial Leverage in Much the Same