Preferred stock is viewed by many to be similar to a debt issue due to the fact that preferred stock dividends are a deductible corporate expense.

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Quizplus · Accepted Answer

Preferred stock is not viewed as similar to a debt issue just because its dividends are deductible corporate expenses. Unlike debt, preferred stock does not require the corporation to make regular interest payments and does not have a maturity date. Additionally, preferred stock represents ownership in the company and may have voting rights, unlike debt.

Preferred Stock Is Viewed by Many to Be Similar to a Debt