Question

How to decide whether a firm should use preference shares stocks or bonds for capital financing

Answer 1

Corporations also might value preference shares for their call feature. Most, but not all, preferred stock is callable. After a set date, the issuer can call the shares at par value to avoid significant interest rate risk or opportunity cost. Owners of preference shares also do not have normal voting rights.

Answer 2

Answer:

Corporate bonds and preferred stocks are two of the most common ways for a company to raise capital. Income-seeking investors can make good use of either: The bonds make regular interest payments, and the preferred stocks pay fixed dividends