Preferred stock is often called a hybrid security because it has some characteristics that are typical of debt and others that are typical of 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.

Characteristic	Debt	Common Stock
Dividend calculated as a percentage of the par value
Usually nonparticipating
May be called, or redeemed, prior to the end of its normal life

Happy Orange Storage Company is required to repurchase and retire 5% of its preferred stock each year. Which type of provision does Happy Orange have in its preferred stock agreements?

A call provision

A participating provision

A sinking fund provision