Preferred Stock Has Contractual Provisions That Give It a Preference

question 9

Short Answer

Preferred stock has contractual provisions that give it a preference over common stock as to ___________________ and to ___________________ in the event of liquidation.

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Definitions:

Bond

A fixed-income investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period at a variable or fixed interest rate.

Straight-Line Method

A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.

Yearly Interest Expense

The total amount of interest payment a company owes over the course of a year on its borrowings.