Who are the major purchasers of nonconvertible preferred stock? Why?

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Who are the major purchasers of nonconvertible preferred stock? Why?

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Who are the major purchasers of nonconvertible preferred stock? Why?

Explanation & AnswerSolution by a verified expert

Explanation

The nonconvertible preferred stocks are the stocks wherein the investor do not have the option to convert it to common equity. The dividend income on preferred stock is subject to a lower rate of tax than the interest income to the investors. Therefore, the corporation generally owns most of the nonconvertible preferred stock.

Verified Answer

The corporations are usually the major purchasers of the nonconvertible preferred stock.

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