When a firm issues preferred stock to raise capital instead of common stock or debt, what is one key advantage and one key disadvantage of this decision?

Advantage: Preferred stockholders do not have voting rights, allowing the firm to retain more control.

Disadvantage: Preferred stock dividends are tax$-$deductible, reducing the firm's tax liability.

Advantage: Preferred stock dividends are typically lower than interest payments on debt, making financing cheaper.

Disadvantage: Preferred stockholders have higher voting power than common stockholders, reducing management control.

Advantage: Preferred stock avoids the obligation of fixed debt payments, reducing financial risk.

Disadvantage: Preferred stock dividends are not tax$-$deductible, making it more expensive than debt financing.

Advantage: Preferred stockholders receive guaranteed dividend payments even in financial distress.

Disadvantage: Issuing preferred stock increases the company's debt burden, raising default risk.