Which of the following is not the advantage of the preferred shares? a. the obligation...
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Finance
Which of the following is not the advantage of the preferred shares?
a.
the obligation to pay preferred dividends is not firm, and passing (not paying) a preferred dividend cannot force a firm into bankruptcy.
b.
preferred issues reduce the cash flow drain from repayment of principal that occurs with debt issues.
c.
preferred share dividends are not normally deductible to the issuer, so the after-tax cost of preferred is typically higher than the after-tax cost of debt.
d.
by issuing preferred shares, the firm avoids the dilution of ordinary equity that occurs when ordinary shares are sol
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