preferred

Examples of preferred in the following topics:

• Preferred Stock

  • Preferred stock (also called preferred shares, preference shares or simply preferreds) is an equity security with properties of both an equity and a debt instrument , and is generally considered a hybrid instrument.
  • Similar to bonds, preferred stocks are rated by the major credit-rating companies.
  • The rating for preferreds is generally lower, since preferred dividends do not carry the same guarantees as interest payments from bonds, and they are junior to all creditors.
  • Details with regards to the rights associated with preferred stock will vary with the business entity that issues the shares, and preferred stock can come in a number of different classes.
  • Some examples are prior preferred stock (highest priority), preference preferred stock, convertible preferred stock (exchangeable for common stock), cumulative preferred stock, exchangeable preferred stock, participating preferred stock, putable preferred stock, monthly income preferred stock, and non-cumulative preferred stock.

• The Cost of Preferred Stock

  • The cost of preferred stock is equal to the preferred dividend divided by the preferred stock price, plus the expected growth rate.
  • The price of a preferred stock is $100.
  • The cost of preferred stock is 13%.
  • This tells us that the cost of preferred stock is equal to the preferred dividend divided by the preferred stock price, plus the expected growth rate.
  • The cost of preferred stock is equal to the preferred dividend divided by the preferred stock price, plus the growth rate.

• Accounting for Preferred Stock

  • When a corporation issues both preferred and common stock, the preferred stock may be:
  • Most preferred stock has a par value.
  • Most preferred stocks are preferred as to assets in the event of liquidation of the corporation.
  • Stock preferred as to assets is preferred stock that receives special treatment in liquidation.
  • Convertible preferred stock is uncommon, most preferred stock is nonconvertible.

• Preferred Stock Rules and Rights

  • Preferred stock can include rights such as preemption, convertibility, callability, and dividend and liquidation preference.
  • Terms of the preferred stock are stated in a "Certificate of Designation. "
  • The following features are usually associated with preferred stock: Preference in dividends preference in assets, in the event of liquidation, convertibility to common stock, callability, and at the option of the corporation.
  • Some preferred shares gain voting rights when the preferred dividends are in arrears for a substantial time.
  • Preferred stock may also have rights to cumulative dividends.

• Common and Preferred Stock

  • Preferred stock is considered to be a form of equity security.
  • Preferred stock generally has preference in receiving dividend payments and always has preference in asset claims during liquidation.
  • In general, there are four different types of preferred stock: cumulative preferred stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock.
  • Convertible preferred stock are preferred issues which holders can exchange for a predetermined number of the company's common-stock shares.
  • The final type, participating preferred stock, are preferred issues that offer holders a set, specified dividend.

• Provisions of Preferred Stock

  • Preferred stock may be entitled to numerous rights, depending on what is designated by the issuer.
  • Once converted, the common stock cannot be converted back to preferred status.
  • There is a class of preferred shares known as "participating preferred stock. " These preferred issues offer holders the opportunity to receive extra dividends if the company achieves predetermined financial goals.
  • Almost all preferred shares have a negotiated, fixed-dividend amount.
  • Describe in detail the different types of provisions for preferred stock

• Convertible Stock

  • Convertible securities can include bonds that pay interest or preferred stocks that pay dividends.
  • Preferred stock (also called preferred shares) is an equity security with properties of both an equity and a debt instrument, and is generally considered a hybrid.
  • Unlike common stock, preferred shares usually have no voting rights.
  • A cumulative preferred stock accumulates unpaid prior period dividends into the future, while a non-cumulative preferred loses rights to any dividends not paid in prior periods.
  • Accounting principles require the reporting of convertible preferred stock in the same manner as non-convertible preferreds.

• Claim to Income

  • Preferred and common stock have varying claims to income which will change from one equity issuer to another.
  • In general, preferred stock will be given some preference in assets to common assets in the case of company liquidation, but both will fall behind bondholders when asset distribution takes place.
  • Preferred stock also has the first right to receive dividends.
  • In general, common stock shareholders will not receive dividends until it is paid out to preferred shareholders.
  • Preferred stock may or may not have a fixed liquidation value (or par value) associated with it.

• Dividend Preference

  • Within the basic class of preferred stock, a company may have several specific classes of preferred stock, each with different dividend rates or other features.
  • It is called "common" to distinguish it from preferred stock.
  • Preferred stock (also called preferred shares, preference shares or simply preferreds) is an equity security with properties of both an equity and a debt instrument, and is generally considered a hybrid instrument.
  • Terms of the preferred stock are stated in a "Certificate of Designation. "
  • The rating for preferreds is generally lower, since preferred dividends do not carry the same guarantees as interest payments from bonds, and because they are junior to all creditors.

• Accounting for Sale of Stock

  • Most stock sales involve common stock or preferred stock.
  • The sale of preferred stock is similarly treated, but a separate accounts should be established to record preferred stock and any additional paid in capital for preferred stock sold at above par value.
  • Most stock sales involve common stock or preferred stock.
  • Summarize how to account for the sale of common stock, preferred stock and treasury stock