CFP - Preferred Stock

Question 1

Is preferred stock DEBT or EQUITY?

Answer 1

BOTH

DEBT FEATURES
-Par value
-Stated dividend as a percentage of par

EQUITY FEATURES
-price pf preferred stock may move with the price of common

Question 2

Difference between a BOND and Preferred stock?

Answer 2

-NO maturity date likes a bond

Question 3

Difference between Common Stock and Preferred stock?

Answer 3

Dividend does not fluctuate with common

Question 4

What is the Tax Advantage with preferred stock?

Answer 4

Corporations receive DRD (dividends received deduction)