"Equity Investments":Advantages of convertible preferred stock

C is correct. Instruments that are infrequently traded and expensive to carry as inventory (e.g., very large blocks of stock, real estate properties, fine art masterpieces, and liquor licenses) are executed in brokered markets. Organizing order-driven markets for such instruments is not sensible because too few traders would submit orders to them. 

A is incorrect. In quote-driven markets (also called price-driven, dealer, or OTC markets) customers trade with dealers, and the instruments traded are mostly bonds, currencies, and spot commodities. 

B is incorrect. An order-driven market follows an order matching system run by an exchange or a broker using rules to arrange trades submitted by traders.

A is correct. Convertible preference shares tend to exhibit less price volatility than the underlying common shares because the dividend payments are known and more stable.

 B is incorrect. An opportunity to receive additional dividend if the company’s profits exceed a pre-specified level is the benefit that accrues to the holders of participating preferred shares, not convertible preference shareholders.

C is incorrect. Preference dividends are fixed but, unlike interest payment on debt, they are not contractual obligations of the company.