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Preferred stock has a fixed maturity and pays a constant dividend pays dividends.
What is the preferred stock?
- The term "stock" refers to ownership or equity in a firm.
- There are two types of equity—common stock and preferred stock.
- Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders.
- The details of each preferred stock depend on the issue.
- Preferred shareholders have priority over common stockholders when it comes to dividends, which generally yield more than common stock and can be paid monthly or quarterly.
- These dividends can be fixed or set in terms of a benchmark interest rate like the London InterBank Offered Rate (LIBOR), and are often quoted as a percentage in the issuing description.
- Adjustable-rate shares specify certain factors that influence the dividend yield, and participating shares can pay additional dividends that are reckoned in terms of common stock dividends or the company's profits.
- The decision to pay the dividend is at the discretion of a company's board of directors.
- Unlike common stockholders, preferred stockholders have limited rights which usually do not include voting.
- Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to appreciate. This appeals to investors seeking stability in potential future cash flows.
To learn more about the Preferred stock, refer to: https://brainly.com/question/18068539
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