Preferred stock is the least used of all long-term securities because
A) investors can get higher returns after taxes in other investments.
B) preferred dividends are considered regular (fixed) obligations but are not tax-deductible.
C) flotation costs are extremely high compared to bonds.
D) all of these.

Question

Quizplus · Accepted Answer

Preferred stock is less attractive because it offers lower after-tax returns compared to other investments, preferred dividends are fixed obligations but not tax-deductible, and flotation costs can be high.

Preferred Stock Is the Least Used of All Long-Term Securities