alleryStart learning →How are credit ratings of preferred stocks generally related to those of bonds?
AAlways identical
BGenerally higher
CGenerally lower
DNever assigned
Answer & Solution
Correct answer: C. Generally lower
Preferred dividends lack the guarantee of bond interest and preferred claims are junior to creditors, so ratings are lower.
Keep practising Sources of Finance
Browse all Sources of Finance questions for CA Inter, or explore more Financial Management topics.
Related questions
What is the usual outcome at the end of a finance lease, as in hire purchase?Under operating lease treatment, what happens to leverage ratios?Under the IFRS approach, when is a lease a finance lease?How does capitalising a finance lease affect the balance sheet?Who is typically the legal owner of the asset during a finance lease?Historically, how have many IPOs been priced relative to market demand?In a Dutch auction IPO, what do all successful bidders pay?A greenshoe option usually lets underwriters raise the offering by up to what percentage?