In what ways are preferred shares like debt and in what ways are they

In what ways are preferred shares like debt and in what ways are they like common equity?

What will be an ideal response?

ANSWER

Like debt preferred shares are paid prior to equity and expect to receive a predetermined payout that must be paid prior to common stock holders receiving any. Further, neither debt nor preferred stock have voting rights.

Like common stock, preferred dividends are paid after taxes and do not benefit the firm with a tax shield. Further, they do do not have recourse to bankruptcy f liquidation if preferred shares are not paid. and, if the preferred shares are participating, they may enjoy sharing in extra dividends with common stock.