Considering the additional financial uncertainty introduced by the coronavirus pandemic, which of the following statements about preferred stock is CORRECT? $($Learning Objective $5$E$)$

Question $29$Answer

a$.$

In the context of the coronavirus impact, a major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.

b$.$

Taking the coronavirus pandemic into account, preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm's common stock, and, as a result, the expected after$-$tax yield on the preferred is lower than the after$-$tax expected return on the common stock.

c$.$

Even amid the coronavirus pandemic, the preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase $($on a pro rata basis$)$ new issues of preferred stock.

d$.$

One of the disadvantages to a corporation of owning preferred stock in the era of coronavirus is that $70\%$ of the dividends received represent taxable income to the corporate recipient, whereas interest income earned on bonds would be tax free.

e$.$

During the times of financial instability exacerbated by the coronavirus, one of the advantages to financing with preferred stock is that $70\%$ of the dividends paid out are tax deductible to the issuer.