Explain the Main Differences Between Debt and Equity

question 54

Essay

Explain the main differences between debt and equity.

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Definitions:

Par Common Stock

The nominal or face value assigned to a share of common stock as stated in the corporate charter, which has little relation to its market value.

Par Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid out before any dividends are paid to common stockholders.

Date Of Declaration

The specific date on which a company's board of directors announces the issuance of a dividend.

Liability

Financial obligations or debts that an entity is legally required to repay in the future.