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anonymous

  • one year ago

What type of stock receives an equal part of the profits on each share to be distributed after all other obligations of a company have been satisfied? A. Common B. Cumulative preferred C. Preferred D. No-par i will give a medal ^_^

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  1. anonymous
    • one year ago
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    i think its preferred what do you think?

  2. jim_thompson5910
    • one year ago
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    I'm thinking that it's either that or common stock. I'm still looking though.

  3. anonymous
    • one year ago
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    ok, thanks

  4. jim_thompson5910
    • one year ago
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    Ok so I'm reading that preferred stock holders get a fixed amount of dividends. That's a good thing if you are a preferred stock holder. However, if the net earnings of the company goes up, then the preferred dividend amount does NOT go up. It's set at a fixed amount. So you'd go for preferred stock if you have a fear the earnings may go down. If you think their earnings will go up, go for common stock. If a common stock has dividends, the those dividends will increase as the earnings increases.

  5. anonymous
    • one year ago
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    so, its common?

  6. jim_thompson5910
    • one year ago
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    Preferred Stock pros: you lock in a fixed dividend good for when you want income, even if the company isn't performing well cons: the fixed dividend does not increase if the company does better no voting rights (it's similar to debt, rather than equity) ------------------------------------------------------------------- Common Stock pros: the dividend usually increases if the company does better (assuming dividends are issued) there are voting rights cons: if preferred stock holders don't get dividends, then neither do common stock holders if company's earnings go down, then dividends likely go down too http://www.accountingcoach.com/stockholders-equity/explanation/7

  7. jim_thompson5910
    • one year ago
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    yeah it's common

  8. anonymous
    • one year ago
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    i thought for sure that it was preffered though XD i guess i was wrong

  9. anonymous
    • one year ago
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    thanks again ^_^

  10. jim_thompson5910
    • one year ago
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    preferred stock is a lot like debt they issue "dividends" which essentially is an interest payment because it's based on the par value. It's a fixed amount that doesn't change based on the earnings

  11. jim_thompson5910
    • one year ago
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    so it's a bit strange why even bother with preferred stock and why not just go with bonds

  12. anonymous
    • one year ago
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    ok, i think i get it now

  13. jim_thompson5910
    • one year ago
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    Oh I'm reading that a bond has higher precedence than a preferred stock. So if a company goes belly up, then the bond holders get paid first (so that may explain why bond holders have a lower rate)

  14. anonymous
    • one year ago
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    ok, well, i got the answer now, and i understand it now, so thanks again ^_^

  15. jim_thompson5910
    • one year ago
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    no problem

  16. anonymous
    • one year ago
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    im gonna go ahead and close this now ^_^

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