Preferred shares may be issued instead of common shares
A)To increase financial leverage
B)To prevent dilution of voting ownership
C)To appeal to investors who believe that common shares are too risky
D)To increase the return earned by common shareholders
E)All of these

Question

Quizplus · Accepted Answer

Preferred shares can be issued instead of common shares for all the reasons listed. They can increase financial leverage, prevent dilution of voting ownership, appeal to risk-averse investors, and provide a higher rate of return to common shareholders.

Preferred Shares May Be Issued Instead of Common Shares