To the security holder, preferred stock usually offers higher risk and lower after-tax return compared to bonds.

Name: To the security holder, preferred stock usually offers higher risk and lower after-tax return compared to bonds.
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Preferred stock typically offers higher yields than bonds since it is considered a riskier investment. Additionally, the dividends paid on preferred stock are usually taxed at a higher rate than bond interest, resulting in a lower after-tax return.

To the Security Holder, Preferred Stock Usually Offers Higher Risk