1. Based on their incentives and interests, different stakeholders tend to classify preferred stock differently in terms of risk. From the viewpoint of the issuing corporation, preferred stock is ___________risky than bonds.

a. less b. more 2. For an investor, preferred stock is considered _________risky than bonds.

a. less b. more

3. The preceding statement accurately describes a characteristic of preferred stocks. True or False 4. Preferred stock offers the issuing corporation and investors advantages and disadvantages. Which of the following statements describes an advantage for the issuer of preferred stock? a. Choosing to not pay a preferred dividend payment will not lead the firm to bankruptcy b. The after-tax cost of prerred stock is higher than the after-tax cost of debt.