BU111 Lecture Notes - Lecture 23: Savings Account, Market Trend, Preferred Stock
19
BU111 Full Course Notes
Verified Note
19 documents
Document Summary
Characteristics of a stock: equity, voting rights, no fixed term no maturity date/expiry, variable return stock prices change, discretionary payment (dividends, risk: riskier than bonds (bondholders ahead of stockholders and have legal documents) Benefit: you don"t need to pay back stocks in the future or any time in between, after you buy them. Discretionary payment if there is money left, shareholders" representatives (bod) can decide to distribute a portion of those profits(dividend) but dividend might be better to keep for business. Preferred stock: usually issued with a stated par value. Dividends paid on these are usually expressed as a % of the par value. Some preferred stock is callable, meaning the issuer can require stockholders to surrender shares for cash. The amount of cash is specified in contract. Common stock: people buy firm"s common stock hoping it will increase in value & provide dividend.
