Generally preferred stock does not have tax benefit like that of debt thus, they have high cost (after tax cost) when compared to debt. But on the other hand, the preferred stock will not contribute or increase the risk of bankruptcy like that of debt. From the investor point of view, it is considered to be risky than debt instruments but they get only the fixed return expectation is with the floating interest rate. 70% of the preferred dividend is being exempted from the tax in case of corporate investors for such corporations these preferred stock will be beneficial and this increases the rate of return. This instrument can also be convertible but in today's context they are not mostly issued by manly corporation and they have floating interest rate. Generally preferred stock does not have tax benefit like that of debt thus, they have high cost (after tax cost) when compared to debt. But on the other hand, the preferred stock will not contribute or increase the risk of bankruptcy like that of debt. From the investor point of view, it is considered to be risky than debt instruments but they get only the fixed return expectation is with the floating interest rate. 70% of the preferred dividend is being exempted from the tax in case of corporate investors for such corporations these preferred stock will be beneficial and this increases the rate of return. This instrument can also be convertible but in today's context they are not mostly issued by manly corporation and they have floating interest rate