Preferred shares may provide for redemption by the issuing firm in the future.Redeemable preferred shares carry which of the following redemption rights or obligations?

Question

Quizplus · Accepted Answer

Redeemable preferred stock can have different redemption rights or obligations. The issuing firm may have the right to redeem the stock under certain conditions, which is option A. Alternatively, the preferred stock may be mandatorily redeemable, which means it has attributes of both long-term debt and shareholders' equity, with the specified redemption time analogous to the maturity date of long-term debt, which is option B. Lastly, some preferred stock may be redeemable at the option of the holder, with the owner of the preferred stock having the right to require the issuing firm to repurchase the shares, which is option C. Therefore, all of the above options are correct, making option D the best choice.

Preferred Shares May Provide for Redemption by the Issuing Firm