finance (bonds to stock)
posted by Jason .
corporations prefer bonds to preferred stock for financing their operations because?
A. prefered stocks require a dividend
B. bond interest rates change with the economy while stock dividends remain constant
C. the aftertax cost of debt is less than the cost of preferred stock
D. none of the above
preferred stock don't require a dividend, I don't know if stock dividends remain constant, aftertax cost of debit is cheeper than the cost of preferred stock.
I like C as my FINAL ANSWER, but I am not certain
Is this correct?

The answer is C because the bond interest payments can be considered a business expense, leaving more after tax income for stockholders and retained earnings.
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