Question: What is callable preferred stock?
Answer: A type of preferred stock that gives a corporation the right to call in the stock at a certain price and to retire the stock. Callable preferred stock is one of many types of preferred stock. Instead of having a maturity date, it can be bought back by the issuing company for a certain price on a certain date.
Question: Why do corporations issue such stock?
Answer: Issuing callable stock offers the company protection against future interest rate fluctuation. Just like a homeowner wants the ability to refinance should rates drop in the future, a company wants the right to call back stock that pays a higher rate when rates go down.
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Like bonds, preferred stock pays a set dividend to investors, which is usually much larger than the dividend on a company's common stock. However, as with dividends paid by common shares, dividends on preferred shares can be suspended at any time.
Question: What type of stock would you want to buy personally and why?
Answer: When you invest in a company, there are two basic types of stock you can purchase: common stock and preferred stock. If you invest in common stock which, as its name implies, is most common, the company cannot force you to sell your shares back to them. Preferred stock, on the other hand, is oftentimes "callable" or "redeemable," and the company does have the right to force investors to sell back their shares. So I would buy Callable preferred stock. This premium translates into higher dividend payments than comparable non-callable stock offers.
Wainwright, S. (Ed.). (2012). Principles of Accounting: Volume II. San Diego, CA: Bridgepoint Education.
Question: What is the most important role of management accounting?
Answer: Management accountants work at the beginning of the accounting cycle, recording the financial transactions of a company as they occur. This business role ensures that companies have a good understanding of their financial health giving executive management the ability to make informed decisions. Management accountants is...