Chapter 7 Assignment Back to Assignment Attempts Keep the Highest/3 1. Preferred stock Preferred stock is often called a hybrid security because it has some characteristics that are typical of debt and others that equity. The following table lists several characteristics of preferred stock. Determine which of these characteristics are consis 1. Preferred stock 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 charactensties are consistent with debt securities and which are consistent with common stock Characteristic Debt Common Stock Its dividends are fixed in amount It has a par, or face, value O Failure to pay its dividend does not send them into bankruptcy 0 Bio Walnut Nut Company is preferred stock agreements? to repurchase and retire 5% of its preferred stock each year. Which type of provision does Big Walnut have in its O sinking fund provision O A call provision A participating provision For the same issuing fun and on the same day of sce, which security tends to have a lower after tax cost to the issue debtor preferred stock Why is this the case