Types of Stock chapter 8

Types of Stock chapter 8 - Types of Stock Common Stock:...

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Types of Stock Common Stock : when only one class of stock is outstanding All stockholders have equal voting rights Preferred stock : typically having priority over common shares in… Dividend distributions: they get dividends before common stock holders get it Distributions of assets in case of liquidation: if the company ceases to exist, the preferred shareholders get the money first Usually has a stated dividend rate Normally has no voting rights Reasons for issuing preferred stock To raise capital without sacrificing control To boos the return earned by common stockholders through financial leverage To appeal to investors who may believe the common stock is too risky or that the expected return on common stock is too low Types of preferred stock Cumulative: dividends not paid to stockholders in a particular year, have to be paid in another year Dividend in arrears : must be paid before dividends may be paid on common stock Noncumulative: any dividends not paid in a particular year are lost
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This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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Types of Stock chapter 8 - Types of Stock Common Stock:...

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