Preference Stocks: Are You A Preference Member?

by David Jenyns on July 22, 2009

There are various features of preference stocks. Sometimes there may be a preference issue, which has no stated par value, but the return is definitely stated so that an assumed par value may easily be calculated.

The market price will be in the neighborhood of this assumed value, depending upon the existing money rates and general business conditions.

In recent years, when money has been more plentiful, many issues have had 4 percent, 42 percent, and 5 percent rates. Preference stocks usually have a provision for the regular payment of dividends, there usually being a statement, in effect, that regular quarterly dividends at the stated rate must be declared and paid upon the preference stock before any payment may be made upon any stock of lower rank, such as the common.

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