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August 31, 2015

Homework Help: finance (bonds vs. perferred stock)

Posted by Jason on Saturday, July 26, 2008 at 4:45am.

Corporations prefer bonds to preferred stock for financing their operations because

A. preferred stocks require a dividend
B. bond interest rates change with the economy while stock dividends remain constant
C. the after-tax cost of debt is less than the cost of preferred stock
D. none of the above

none of these choices provide a clear reason for corporations perferring bonds to stocks for financing their operations.

I chose D none of the above...
Is this correct?

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