Preferred stock is riskier than long-term debt because its claim on assets and income come after those of bonds.

Name: Preferred stock is riskier than long-term debt because its claim on assets and income come after those of bonds.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This statement is true. Preferred stock typically ranks lower in priority than long-term debt in terms of claiming assets and income in the event of bankruptcy. Therefore, preferred stock is considered riskier than long-term debt.

Preferred Stock Is Riskier Than Long-Term Debt Because Its Claim