If a company is thinking about issuing preferredstock to raise capital, what are some factors thatit should consider? What factors should an investorconsider before buying preferred stock?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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If a company is thinking about issuing preferred
stock to raise capital, what are some factors that
it should consider? What factors should an investor
consider before buying preferred stock?

Expert Solution
Step 1: INTRODUCTION

Preferred stocks are the stocks which are redeemed by the firm before the redemption of equity shares. On preferred stock, dividend is also paid before the dividend is paid on the equity shares.

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