Which of the following statements is correct?
A)Companies issue preferred shares only to have better control of the firm.
B)Preferred shares pay a guaranteed dividend.
C)Preferred dividends are not tax deductible by the issuing firm.
D)None of the above

Question

Quizplus · Accepted Answer

Preferred dividends are not tax deductible for the issuing firm, unlike interest payments on debt. This is a key difference in the tax treatment of debt versus equity financing.

Which of the Following Statements Is Correct