Preferred stock is often called a hybrid security because it has some characteristics that are typical of debt and others that are typical of common equity. The following table lists several characteristics of preferred stock. Determine which of these characteristics are consistent with debt securities and which are consistent with common stock. Cute Camel Woodcraft Company currently pays preferred stockholders a dividend of $1.50 per share and common stockholders a dividend of $1.00 per share. If the firm wants to raise the common stock dividend to $2.00 per share, it will also have to raise the preferred stock dividend to $2.00 per share. Which type of provision does Cute Camel have in its preferred stock agreements? A call provision A sinking fund provision A participating provision For the same issuing firm and on the same day of issuance, which security tends to have a greater after-tax cost to the issuer, preferred stock or common stock? Why is this the case? Preferred stock, because preferred stock has priority over common stock in the payment of dividends and the distribution of liquidated assets Common stock, because its dividends are tax deductible Common stock, because it represents a perpetuity, while preferred stock has a specific maturity date Preferred stock, because the failure to pay its dividends will not put the issuer into bankruptcy