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Boundless Finance
Stock Valuation
Finance Textbooks Boundless Finance Stock Valuation
Finance Textbooks Boundless Finance
Finance Textbooks
Finance

Section 3

Rules and Rights of Common and Preferred Stock

Book Version 3
By Boundless
Boundless Finance
Finance
by Boundless
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6 concepts
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Claim to Income

In the cases of bankruptcy and dividend distribution, preferred stock shareholders will receive assets before common stock shareholders.

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Voting Right

Common stock generally carries voting rights, while preferred stock does not; however, this will vary from company to company.

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Purchasing New Shares

New shares can be purchased on exchanges and current shareholders will usually have preemptive rights to newly issued shares.

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Preferred Stock Rules and Rights

Preferred stock can include rights such as preemption, convertibility, callability, and dividend and liquidation preference.

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Provisions of Preferred Stock

Preferred shares have numerous rights which can be attached to them, such as cumulative dividends, convertibility, and participation.

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Comparing Common Stock, Preferred Stock, and Debt

Common stock, preferred stock, and debt are all securities that a company may offer; each of these securities carries different rights.

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