ACC 291 Week 3 DQ 2
ACC 291 Week 3 DQ 2
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This 0 page Study Guide was uploaded by kimwood Notetaker on Friday November 13, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 14 views.
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Date Created: 11/13/15
Week 3 DQ 2 Why is preferred stock referred to as preferred What are some of the features added to preferred stock that make it more attractive to investors Would you select preferred stock or common stock as an investment Why 1 Callable preferred stock has an embedded option allowing the issuer to call shares either at par or at a slight premium above par In a typical arrangement shares are not callable for the rst few years following issuance but can be called perhaps with a month39s notice any time thereafter As with callable bonds the price behavior of callable preferred stock depends on whether the call option is inthemoney or outof themoney as well as the nancial strength of the issuer 2 Adjustablerate preferred stock has a dividend yield that instead of being xed oats with speci ed interest rates according to some formula 3 Convertible preferred stock has an embedded option that allows the holder to exchange each preferred share for a speci ed number of common shares Convertible preferred is usually callable This allows the issuers to call the stock and force preferred shareholders to choose between accepting either par value or common shares 4 Participating preferred stock pays a regular xed dividend plus an additional dividend if the common stock dividend exceeds some speci ed value ACC 291
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