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Series 7 Notes Essay

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Below is an essay on "Series 7 Notes" from Anti Essays, your source for research papers, essays, and term paper examples.

Preferred stock
  * Deemed a “senior” security because it has priority over common stock.
      * Receive dividend before common
      * Paid before common if company liquidates

  * Typically issued at $100 par with a stated dividend rate
      * Typically paid semi-annually
      * Ex. 10% -> $5 every 6 months
      * Dividends are a fixed amount
  * Recently have been issuing preferred stock at $25 & $50
      * Makes a round lot (100 shares) more affordable

Interest Movements and Preferred Stock Prices
  * When preferred are issued, the dividend rate is comparable with the market rate of interest at that time
      * Current Yield = Annual Income from Security/ Market Price
      * If interest rates increase it decreases the preferred stock price and vice versa

Preferred Stock Features: Cannot vote
  * No preemptive rights (because issuance shares doesn’t dilute holdings)
  * Preference to dividend distributions & company assets
  * Difference between BONDS and PREFERREDS
      * Bonds mature, Preferred indefinite life
      * Bondholders have priority of claim to interest payments and assets upon liquidation
      * Bondholders have a legal right to interest payments; preferreds only pay if the BOD declare it
  * Cumulative
      * If issuer omits a dividend payment it accumulates and are paid if possible. Accumulated preferred dividends must be paid to pay common dividend
  * Callable
      * Issuer has the right to “call in” the shares after a set date. Issuers will call the shares if interest rates fall. Once called now new preferreds can be issued at a lower interest rate.
  * Convertible
      * Preferred shareholder can convert his shares into common based upon a predetermined price. In this case holders can enjoy capital gains is the stock price increases.
  * Conversion Ratio
      * Conversion Ratio = Par/ Conversion Price
  * Parity Price
      * If the stock price rises above...

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Series 7 Notes. Anti Essays. Retrieved December 15, 2018, from the World Wide Web: http://teachingsail.com/free-essays/Series-7-Notes-583759.html


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