A. The payment of a preferred stock dividends is discretionary. Missing a dividend payment will not be a default on the part of the issuer. The board of directors can omit paying a preferred stock dividend if it chooses. Therefore, preferred stock dividends are not legal obligations of the corporation.

B. Preferred stock can be owned by corporate investors, institutional investors, or private investors.

C. Preferred stock usually does not have a maturity date, but that is not a disadvantage to the firm that issues it.

D. Because equity carries no guarantee of a return, investors typically demand a higher yield to compensate for the higher risk.