WGU C214 Financial Management OA Study Guide | Time
Value of Money, NPV, Ratios & Exam Prep Notes | Pass
the OA Fast
Characteristics of preferred stock includes
-dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)
Preferred stock dividends
can go without payment and pay in arrears the following year
Characteristics of common stock are
-voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
, New start up ventures often issue
preferred stock (in an IPO)
What stock is considered a hybrid
preferred stock
One thing common stock and preferred stock have in common is
both have no maturity date
Which type of security has voting rights
common stock
Debt covenants and restrictions help to ensure that
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds
-when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
Bond sells at face value when
required rate of return is equal to the coupon rate
Value of Money, NPV, Ratios & Exam Prep Notes | Pass
the OA Fast
Characteristics of preferred stock includes
-dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)
Preferred stock dividends
can go without payment and pay in arrears the following year
Characteristics of common stock are
-voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
, New start up ventures often issue
preferred stock (in an IPO)
What stock is considered a hybrid
preferred stock
One thing common stock and preferred stock have in common is
both have no maturity date
Which type of security has voting rights
common stock
Debt covenants and restrictions help to ensure that
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds
-when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
Bond sells at face value when
required rate of return is equal to the coupon rate
