Although preferred stock provides added financial leverage in much the same way as bonds, it differs from bonds in that the issuer can pass a dividend payment without suffering the consequences that result when an interest payment is missed on a bond.

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This statement is true. Unlike bonds, preferred stock dividends are not a contractual obligation, and missing a dividend payment does not lead to default or bankruptcy. However, consistently missing dividend payments can still negatively impact the issuer's reputation and stock price.

Although Preferred Stock Provides Added Financial Leverage in Much the Same