This essay has been submitted by a student. This is not an example of the work written by professional essay writers.
Uncategorized

Preferred stock financing

Pssst… we can write an original essay just for you.

Any subject. Any type of essay. We’ll even meet a 3-hour deadline.

GET YOUR PRICE

writers online

Preferred stock financing

The term stock means “ownership” or equity in a company.  There two types of capital, that is common stock and preferred stock. Many companies usually issue preferred stock, also known as preference shares, to investors to appeal to them of receiving dividends regularly. The preferred stock has a higher priority than common stockholders in terms of dividends, which produces more than the common stock and can be paid every month or even quarterly. As a source of capital for a company, preferred stock takes an intermediate place between long-term debt and common stock. When it comes to long-term debt, it is seen as a fixed-income security, though they get dividends instead of interest payments. Compared to long-term debt, preferred stock is a more permanent way of financing. The reason for this is that the issuing firm does not guarantee repayment at a specific time (Oranburg, 2016).

Types of Preferred Stocks.

There are several types of preferred stock. First, there is Prior Preferred Stock, which is usually paid in case a firm has enough cash to achieve a dividend schedule on one of the preferred stocks. Secondly, there is Preference Stock, which ranked behind the prior type. They receive preference over all other kinds of equities of a given company expect for the prior stock. Thirdly, there is convertible Preferred stock, which is preferred stock which shareholders can exchange for a preset number of the common stock of the company. Additionally, we have participating preferred stock, which allows the investors to get extra dividends in cases where the firm attains some preset financial goals. Lastly, there is cumulative preferred stock, which are missed dividends, and it increases and must be reimbursed before paying the common stockholders their dividends (Reiser & Dean, 2016).

 

References

Reiser, D. B., & Dean, S. A. (2016). Financing the benefit corporation. Seattle UL Rev., 40, 793.

Oranburg, S. C. (2016). Start-up financing. In Start-Up Creation (pp. 57-73). Woodhead Publishing.

  Remember! This is just a sample.

Save time and get your custom paper from our expert writers

 Get started in just 3 minutes
 Sit back relax and leave the writing to us
 Sources and citations are provided
 100% Plagiarism free
error: Content is protected !!
×
Hi, my name is Jenn 👋

In case you can’t find a sample example, our professional writers are ready to help you with writing your own paper. All you need to do is fill out a short form and submit an order

Check Out the Form
Need Help?
Dont be shy to ask