Purchase Solution

Explain why preferred stock is sometimes considered a hybrid

Not what you're looking for?

Ask Custom Question

Explain why preferred stock is sometimes considered a hybrid security (i.e part stock/part bond). Also explain if the equation used to value preferred stock is more like for bonds previously or more like the constant growth model for common equity.

Purchase this Solution

Solution Summary

The expert explains why preferred stock is sometimes considered a hybrid.

Solution Preview

Preferred stock is considered a hybrid security because it pays a fixed amount of dividend that you will keep receiving as long as you are still holding the stocks, and you will always get the fix amount of dividend payments. Type of bonds that can be considered as a hybrid security is convertible bonds.
Preferred stock is very similar to ...

Purchase this Solution


Free BrainMass Quizzes
Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Motivation

This tests some key elements of major motivation theories.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.