Bonds are more attractive to some investors instead of preferred shares because creditors have a preferential claim against the assets over that of preferred shareholders.

Question

Quizplus · Accepted Answer

This statement is true since bondholders have a higher priority claim to the assets of a company in the event of liquidation or bankruptcy compared to preferred shareholders. As such, investors seeking a more secure investment may prefer bonds over preferred shares due to this preferential treatment.

Bonds Are More Attractive to Some Investors Instead of Preferred