Firms may prefer to issue cumulative preferred stock

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Reference no: EM131518287

Firms may prefer to issue cumulative preferred stock rather than debt for which reason?

If there is no current taxable income, preferred stock dividends are automatically voided.

a, Preferred stock has no voting rights but debt does.

b, Preferred dividends provide a tax shield but debt does not.

c, Corporate investors can receive a tax break on dividends but not on interest.

d, Dividend payments are tax deductible, interest on debt is not.

Reference no: EM131518287

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