Which of the following features of preferred stock makes the security more like debt than an equity instrument?
A) Participating
B) Voting
C) Redeemable
D) Noncumulative

Question

Quizplus · Accepted Answer

Redeemable preferred stock gives the issuer the right to buy back the shares from investors at a fixed price, which is more like a debt instrument than an equity instrument. Participating preferred stock allows investors to share in the company's profits above and beyond the fixed dividend rate, which is more like an equity instrument. Voting rights and cumulative/noncumulative features are also more like equity instruments.

Which of the Following Features of Preferred Stock Makes the Security