Difference between revisions of "Preferred shares"
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'''Preferred shares''' are a hybrid financial instrument having characteristics of both [[equity]] and [[debt]]. | '''Preferred shares''' are a hybrid financial instrument having characteristics of both [[equity]] and [[debt]]. | ||
Revision as of 04:49, January 2, 2009
Preferred shares are a hybrid financial instrument having characteristics of both equity and debt.
They are like debt, in that they will carry a specify dividend rate. However, the payment of the dividend is not guaranteed. A company that failed to make a preferred dividend payment would be viewed unfavorably by the market and it is likely all prices of all it's issued shares would fall.
Other influences to the price of preferred shares include prevailing interest rates for debt of similar risk will generate a premium or discount to the share price. However, all those things that influence common shares, can influence the price of preferred shares.