Preferred stock is NOT similar to debt because:
A)preferred dividends are not tax-deductible whereas interest expense is tax-deductible.
B)preferred dividends do not have to be paid whereas interest expense must be paid.
C)preferred stock does not have a maturity date whereas debt usually has a maturity date.
D)all of the above.

Question

Quizplus · Accepted Answer

All the statements provided are correct differences between preferred stock and debt. Preferred dividends are not tax-deductible, unlike interest on debt. Companies are not obligated to pay preferred dividends, whereas they must pay interest on debt. Lastly, preferred stock typically does not have a maturity date, while debt instruments usually do.

Preferred Stock Is NOT Similar to Debt Because