Corporations prefer bonds over preferred stock for financing their operations because

Name: Corporations prefer bonds over preferred stock for financing their operations because
Brand: Quizplus
Rating: 4.8 (51 reviews)

Question

Quizplus · Accepted Answer

Preferred stocks require a dividend, which may be a burden on the corporation's finances. Bond interest rates may change with the economy, but the after-tax cost of debt is typically lower than the cost of preferred stock. Therefore, corporations tend to prefer bonds over preferred stock for financing their operations.

Corporations Prefer Bonds Over Preferred Stock for Financing Their Operations