Preferred stock is a hybrid security because it shares characteristics of both debt and equity securities. However, it is often hard to know how to classify preferred stock when talking about a firm's leverage. 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. For an investor, preferred stock is considered risky than bonds. Read the following statement about a characteristic of preferred stocks and answer the corresponding question. Preferred dividends are usually considered a fixed charge, which makes preferred stock resemble debt. True or False: The preceding statement accurately describes a characteristic of preferred stocks. False True 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? Preferred stocks have higher fixed-income payments than bonds. Preferred stocks help prevent the dilution of common equity