Preferred Stock May Exist Because

Preferred stock may exist because:

A) losses before income taxes prevent a company from enjoying the tax advantages of debt interest while there is no tax advantage for preferred dividends.
B) an advantage exists for the firm; preferred shareholders cannot force the company into bankruptcy because of unpaid dividends.
C) corporations get a 70% tax exemption on preferred dividends received.
D) All of these.
E) None of these.

Correct Answer:

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