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?
B. Cumulative preferred
i will give a medal ^_^
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i think its preferred
what do you think?
I'm thinking that it's either that or common stock. I'm still looking though.
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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.
so, its common?
you lock in a fixed dividend
good for when you want income, even if the company isn't performing well
the fixed dividend does not increase if the company does better
no voting rights (it's similar to debt, rather than equity)
the dividend usually increases if the company does better (assuming dividends are issued)
there are voting rights
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
yeah it's common
i thought for sure that it was preffered though XD i guess i was wrong
thanks again ^_^
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
so it's a bit strange why even bother with preferred stock and why not just go with bonds
ok, i think i get it now
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)
ok, well, i got the answer now, and i understand it now, so thanks again ^_^