#A89

Companies offer preferred stocks or bonds to raise money from investors. The advantage
of issuing bonds is that the transaction is efficient and less expensive. The disadvantage is
that bonds are higher risk investments. So, the investors may be skeptical. In the same
way, the upside of issuing preferred stock is that they are callable. And the downside is
that they have a lower claim on company assets at the time of liquidation.
According to the conversation, there is a chance that the interest rates might increase. In
that case, issuing preferred stock might be safer for the company.