preferred stock is used much less than long term debt in the capital structure o

Question

preferred stock is used much less than long term debt in the capital structure of most industrial and manufacturing companies principally because : a. preferred stock may be convertible to common stock, but long-term debt cannot be convertible b. for income tax purposes, dividends paid on preferred stock are not deductible, but interest on long term debt is deductible. c. the preferred stock dividend requirement is a fixed claim against income, but interest on long-term debt is not a fixed amount. d. preferred stock has a fixed liquidation or redemption valu, but long term debt does not have a fixed maturity value.

Explanation / Answer

. c. the preferred stock dividend requirement is a fixed claim against income, but interest on long-term debt is not a fixed amount.

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