|Cost of Preferred Stock
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Definition of Cost of Preferred Stock
Cost of Preferred Stock
The rate of return required by the investors in the preferred stock of
Schedule of depreciation rates allowed for tax purposes.
A merger or consolidation in which an acquirer purchases the acquiree's stock.
Publicly traded issues that may be collateralized by mortgages and MBSs.
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Total costs, explicit and implicit.
The second-largest stock exchange in the United States. It trades
Floating rate preferred stock, the dividend on which is adjusted every
A firm's required payout to the bondholders and to the stockholders expressed as a
The argument that expected indirect and direct bankruptcy costs offset the other
The beta of a stock is determined as follows:
costs that increase with increases in the level of investment in current assets.
These are securities that represent equity ownership in a company. Common shares let an
Value of outstanding common shares at par, plus accumulated retained
A convertible security that is traded like an equity issue because the optioned
Common stock market
The market for trading equities, not including preferred stock.
Common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Convertible preferred stock
preferred stock that can be converted into common stock at the option of the holder.
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Cost of capital
The required return for a capital budgeting project.
Cost of carry
Related: Net financing cost
Cost of funds
Interest rate associated with borrowing money.
Cost of lease financing
A lease's internal rate of return.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The net present value of an investment divided by the investment's initial cost. Also called
Cumulative preferred stock
preferred stock whose dividends accrue, should the issuer not make timely
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Employee stock fund
A firm-sponsored program that enables employees to purchase shares of the firm's
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
The difference between the execution price of a security and the price that would have
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
A cost that is fixed in total for a given period of time and for given production levels.
preferred stock paying dividends that vary with short-term interest rates.
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
Common stock of a company that has an opportunity to invest money and earn more than the
Common stock with a high dividend yield and few profitable investment opportunities.
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
Transaction costs that include the assessment of the investment merits of a financial asset.
Privately placed common stock, so-called because the SEC requires a letter from the purchaser
stocks that are traded on an exchange.
stocks that are traded on an exchange.
Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
Monthly income preferred security (MIP)
preferred stock issued by a subsidiary located in a tax haven.
Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing
New York Stock Exchange (NYSE)
Also known as the Big Board or The Exhange. More than 2,00 common
Non-cumulative preferred stock
preferred stock whose holders must forgo dividend payments when the
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
The difference in the performance of an actual investment and a desired investment
Philadelphia Stock Exchange (PHLX)
A securities exchange where American and European foreign
Preferred equity redemption stock (PERC)
preferred stock that converts automatically into equity at a
A security that ranks junior to preferred stock but senior to common stock in the right to
Preferred habitat theory
A biased expectations theory that believes the term structure reflects the
preferred shares give investors a fixed dividend from the company's earnings. And more
A security that shows ownership in a corporation and gives the holder a claim, prior to the
Preferred stock agreement
A contract for preferred stock.
Price impact costs
Related: market impact costs
cost to replace a firm's assets.
Repurchase of stock
Device to pay cash to firm's shareholders that provides more preferable tax treatment
Reverse stock split
A proportionate decrease in the number of shares, but not the value of shares of stock
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs associated with locating a counterparty to a trade, including explicit costs (such as
costs that fall with increases in the level of investment in current assets.
Ownership of a corporation which is represented by shares which represent a piece of the corporation's
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend
Formal organizations, approved and regulated by the Securities and Exchange Commission
A firm's repurchase of outstanding shares of its common stock.
An active portfolio management technique that focuses on advantageous selection of
Balance sheet item that includes the book value of ownership in the corporation. It
Stock index option
An option in which the underlying is a common stock index.
Also called the equity market, the market for trading equities.
An option in which the underlying is the common stock of a corporation.
Stock replacement strategy
A strategy for enhancing a portfolio's return, employed when the futures
Occurs when a firm issues new shares of stock but in turn lowers the current market price of its
This is a lettered symbol assigned to securities and mutual funds that trade on U.S.financial exchanges.
Holder of equity shares in a firm.
Set of books kept by firm management for its annual report that follows Financial
The residual claims that stockholders have against a firm's assets, calculated by
Running out of inventory.
costs that have been incurred and cannot be reversed.
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
Common stock that has been repurchased by the company and held in the company's treasury.
True interest cost
For a security such as commercial paper that is sold on a discount basis, the coupon rate
A cost that is directly proportional to the volume of output produced. When production is zero,
Weighted average cost of capital
Expected return on a portfolio of all the firm's securities. Used as a hurdle
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a companyâ€™s assets were sold on the balance sheetâ€™s date. Book value equals:
An assetâ€™s purchase price, plus costs associated with the purchase, like installation fees, taxes, etc.
Cost of goods sold
The cost of merchandise that a company sold this year. For manufacturing companies, the cost of raw
Earnings per share of common stock
How much profit a company made on each share of common stock this year.
MACRS (Modified Accelerated Cost Recovery System)
A depreciation method created by the IRS under the Tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes).
RATE OF RETURN ON STOCKHOLDERSâ€™ EQUITY
The percentage return or profit that management made on each dollar stockholders invested in a company. Hereâ€™s how you figure it:
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