PREFERRED STOCK

What is preferred stock?

• Stock that can be bought & sold in securities market.

• Holder of the preferred stock are not entitled to received dividend.

• There is no tax involved in preferred stock.

• Seller can sell the preferred stock at anytime.

Investor who purchase the preferred stock can claim company assets after common stockholder.

• True

• False

Why preferred stock known as hybrid security?

• Similar with bond as it does not have par value.

• Similar to common stock as both can be traded anytime.

• Similar to bond as both have fixed income.

• Similar to bond as both does not have voting rights.

Preferred stock has preemptive rights

• Yes

• No

Which of these holder of securities can claim assets of company? Reorder your answer from highest to lowest.

• Bondholder, Common Stockholder & Preferred Stockholder

• Bondholder, Preferred Stockholder & Common Stockholder

• Preferred Stockholder, Bondholder & Common Stockholder

• Common Stockholder. Bondholder & Preferred Stockholder

Sweethermanaaas Corporation wants to raise RM500,000 capital from convertible preferred stock to purchase new asset. How many stocks need to be issued to purchase this asset?

• 5,000,000

• 500,000

• 50,000

• 5,000