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3 Cards in this Set

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preferred stock


-does not mature


-holder does not have voting rights


-pays fixed dividends that are cumulative and paid quarterly. not deductible by the issuer


-paid prior to common stock holders


-market value rises when interest rates fall and vice versa. fluctuates more than the bond because there is no maturity

trust preferred stock


ex. MIPS-monthly income preferred stock. major difference is that trust preferreds are structured as debt. this enables the issuing company to deduct dividends paid because the dividends are treated like interest. Interest is taxed to the holder as ordinary income rather than dividend income.


-most have a maturity of 20-40 years

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