Preferred stock may have all of the following characteristics in common with bonds with the exception of:
A) the lack of voting rights.
B) a possible conversion option into common stock.
C) annuity payments.
D) a fixed liquidation value.
E) tax-deductible payments.

Question

Quizplus · Accepted Answer

Preferred stock payments (dividends) are not tax-deductible for the issuing corporation, unlike bond interest payments, which are tax-deductible. This is a key difference between preferred stocks and bonds.

Preferred Stock May Have All of the Following Characteristics in Common