Final answer:
Preferred stock can provide a financing alternative for firms when issuing debt or common stock is costly.
Step-by-step explanation:
Preferred stock can provide a financing alternative for some firms when market conditions are such that they cannot issue either pure debt or common stock at any reasonable cost.
This statement is True. Preferred stock is a type of stock that has characteristics of both debt and common stock. It pays a fixed dividend like a debt instrument, but it also represents ownership in the company like common stock. When market conditions make issuing debt or common stock costly for a firm, they may choose to issue preferred stock instead as a financing alternative.