BU111 Lecture Notes - Lecture 10: Preferred Stock, Common Stock

16 views3 pages
19 Oct 2016
School
Department
Course
wafeliza and 39872 others unlocked
BU111 Full Course Notes
19
BU111 Full Course Notes
Verified Note
19 documents

Document Summary

If they do(cid:374)"t ha(cid:448)e e(cid:374)ough (cid:373)o(cid:374)ey to pay the(cid:373), they (cid:449)o(cid:374)"t. If they do, they can decide to reinvest the money into their own company trying to make their value go up instead of paying investor the dividends: risk (higher than bonds) Common stock vs preferred stock: preferred: hybrid (characteristics of bonds and common stock; equity and debt; no voting rights but still an owner) Trade-off for not voting: promised dividends (paid after debt holders) Larger market (easier to find and easier to sell) Dividend is still a discretionary payment (only if the company has enough) Features (not required but could be attached) Redemption: company can choose to redeem/buy the preferred share (cid:271)a(cid:272)k so they do(cid:374)"t ha(cid:448)e to pay preferred di(cid:448)ide(cid:374)ds. Convertibility: can convert to a common stock. Cumulative: right to dividends so if the company is currently not paying dividends, it accumulates and must be paid to them before common.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents