What are the ADVANTAGES of investing in preferred shares?

Investing in preferred shares comes with several notable advantages, which is why the correct answer encompasses all of the provided options.

Firstly, preferred shareholders enjoy priority on company assets during dissolution compared to common shareholders. This means if a company undergoes liquidation, preferred shareholders are among the first to be compensated before any assets are distributed to common shareholders. This feature makes preferred shares relatively safer than common shares in times of financial distress.

Secondly, while preferred shares typically represent a fixed income investment akin to bonds, they can also present opportunities for capital appreciation. Though this potential may not be as pronounced as with common stocks, certain market conditions or company performance can lead to an increase in the market value of preferred shares, which offers investors the possibility of profiting from their investments beyond just the fixed dividends they receive.

Finally, one of the key characteristics of preferred shares is that shareholders are entitled to receive fixed dividends. This consistent income stream is often viewed favorably by investors seeking stability and predictability in their returns, making preferred shares an appealing investment choice for those looking for an income-oriented investment.

In summary, the correct response reflects the comprehensive advantages of investing in preferred shares, which include the priority in asset claims, the potential for capital appreciation, and the right to fixed