Preferred stock and bonds are similar because
A) they both have voting power
B) interest and dividend payments are legal obligations
C) neither interest nor dividends are tax deductible
D) both are a source of financial leverage

Question

​Preferred stock and bonds are similar because
A) ​they both have voting power
B) interest and dividend payments are legal obligations
C) ​neither interest nor dividends are tax deductible
D) ​both are a source of financial leverage

Quizplus · Accepted Answer

Both preferred stock and bonds are used by companies to raise capital and can provide financial leverage, as they both involve fixed payments that can amplify returns on equity.

​Preferred Stock and Bonds Are Similar Because

Preferred Stock and Bonds Are Similar Because