Which of the following statements is CORRECT?
A. Preferred stockholders have a priority over bondholders to the income in the event of a bankruptcy, but not to the proceeds in the event of a liquidation.
B. The preferred stock of a given firm is generally less risky to investors than the same firm's common stock.
C. Corporations cannot buy the preferred stocks of other corporations.
D. Preferred dividends are not generally cumulative.
E. A big advantage of preferred stock is that dividends on preferred stocks are tax deductible by the issuing corporation.
Answer: B
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