Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Question

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Preferred stock is a financial instrument that allows corporations to raise capital without giving up control of the company. Unlike common stock, preferred stockholders typically do not have voting rights or the same level of ownership in the company. Additionally, preferred stock may offer higher dividends or other benefits that can boost the return earned by common shareholders.

Corporations Issue Preferred Stock to Raise Capital Without Sacrificing Control