Because of tax considerations, corporations often are able to issue preferred stock at a slightly lower yield than debt.

Name: Because of tax considerations, corporations often are able to issue preferred stock at a slightly lower yield than debt.
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Preferred stock dividends are not tax-deductible for corporations, but interest on debt is. This tax treatment can make preferred stock a slightly cheaper form of financing than debt for corporations, leading to a lower yield.

Because of Tax Considerations, Corporations Often Are Able to Issue