Series 65

It is equity ownership in a corporation.

To raise capital

A portion of the company's earnings and dividends and vote in major management decisions.

Common and preferred stock

1. GROWTH: Capital Appreciation when an increase in market price occurs. Long term investment and a hedge against inflation
2. INCOME: Many corps issue quarterly dividends. Sometimes dividends are in the form of additional shares in the issuing company or a subsidiary of the company.
3. RIGHTS OF STOCKHOLDERS. vote for board of directors. usually stockholders have the preemptive right to maintain their proportionate share of ownership in the Corp.
4. LIMITED LIABILITY. stockowner loses investment and is not personally responsible for a bankrupt companies debts.

1. MARKET RISK
2. DECREASED OR NO INCOME
3. LOW PRIORITY AT DISSOLUTION

Chance a stock will decline in price.

Preferred stock is an EQUITY SECURITY because it represents a class of ownership in the issuing corp. HOWEVER< it does have debt security characteristics.

It is a fixed. Interest rates most affect a preferred stock's price versus the business prospects UNLESS dramatic changes in the ability to pay the fixed dividend.

1. DIVIDENDS paid before common stockholders
2. INCOME through fixed dividend
3. PRIORITY CLAIM over common stockholders AFTER creditors.
4. NO preset maturity date and NO scheduled redemption date unlike a true debt security. PERPETUAL SECURITY.

The five types are straight or noncumulative, cumulative, callable, convertible, and adjustable rate.
1. Straight (non cumulative) - no special features just the state dividend payment and missed dividends are not paid to holder.
2. Cumulative - accrues payments. Dividends are in arrears on the books and must all be paid before common stockholdes. ((best for STEADY INCOME))
3.Callable or Redeemable Preferred - Issuer can buy back from the investor at a stated price after a stated date. Allows company to replace a relatively high dividend with a lower one when interest rates fall. dividends cease on the call date. Company may pay a premium exceeding the stocks par value. Problem now the investor has to find somewhere to invest money when interest has gone down.
4. Convertible Preferred - Investor can exchange the shares for a fixed number of shares of common stock of the issuing company. Lower stated dividend than a nonconvertible because investor has opportunity to convert and enjoy capital gains.
5. Adjustable-Rate Preferred. Typically dividends are tied to a benchmark such as Treasury Bills and money market rates. Stock price remains relatively stable.

American Depositary Receipts or American Depositary Shares facilitate the trading of FOREIGN STOCKS in the U.S. Markets.

English and U.S. Dollars.

Common stock holders.

Common stock holders.