A firm’s preferred stock often sells at yields below its bonds because:a. Preferred stock generally carries a higher agency rating.b. Owners of preferred stock have a prior claim on the firm’s earnings.c. Owners of preferred stock have a prior claim on a firm’s assets in the event of liquidation.d. Corporations owning stock may exclude from income taxes most of the dividend income they receive.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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A firm’s preferred stock often sells at yields below its bonds because:
a. Preferred stock generally carries a higher agency rating.
b. Owners of preferred stock have a prior claim on the firm’s earnings.
c. Owners of preferred stock have a prior claim on a firm’s assets in the event of liquidation.
d. Corporations owning stock may exclude from income taxes most of the dividend income they receive.

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