MGMT 1 Lecture Notes - Lecture 1: Preferred Stock, Merage Family, Corporate Bond
Document Summary
Preferred stock stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold. Preferred stockholders do not get voting rights in the firm. May be issued par value that becomes the base for a fixed dividend the firm is willing to pay. Can have other special features that common stock doesn"t have: Callable preferred stockholders could be required to sell their shares back to the corporation. Could be converted to shares of common stock. Cumulative if one or more dividends are not paid when promised, they can accumulate and the corporation must pay them in full at a later date before it can distribute and common stock dividends. Companies often prefer to raise capital by debt financing issuing corporate bonds. Bond corporate certificate indicating that a person has lent money to a firm (or a government).
