Answered: What is money market preferred stock?

Business

Finance

What is money market preferred stock?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter1: An Overview Of Financial Management And The Financial Environment

Section1.3: The Primary Objective Of The Corporation: Value Maximization

Problem 2ST

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Question

What is money market preferred stock?

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

Expert Solution

Step 1

Preferred stock:

The stock that is entitled to have priority over other common stock and with fixed dividend yield.

The holder of preferred stock is not entitled to the right in the decision making of the company.

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