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: Describe characteristics of types of equity securities Directions: Complete the Venn Diagram. Identify the similandies and differences of the two general types of equities.

: Describe characteristics of types of equity securities Directions: Complete the Venn Diagram. Identify the similandies and differences of the two general types of equities.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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LT 1: Describe characteristics of types of equity securities Common shareholders have a residual claim on firm assets and govern the corporation through voting rights. Common shares have variable dividends which the firm is under no legal obligation to pay. Callable common shares allow the firm the right to repurchase the shares at a prespecified price.

Puttable common shares give the shareholder the right to sell the shares back to the firm at a pre-specified price. Preferred stock typically does not mature, does not have voting rights, and has dividends that are fixedn amount but are not a contractual obligation of the firm.

Cumulative preferred shares require any dividends that were missed in the past (dividends in arrears) to be paid before common shareholders receive any dividends. Participating preferred shares receive extra dividends if firm profits exceed a prespecified level and a value greater than the par value if the firm is liquidated. Convertible preferred stock can be converted to common stock at a pre-specified conversion ratio.

 

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Activity 1: Describe characteristics of types of equity securities Directions: Complete the Venn Diagram. Identify the similandies and differences of the two general types of equities.

Reference: LT 1: Describe characteristics of types of equity securities Common shareholders have a residual claim on firm assets and govern the corporation through voting rights. Common shares have variable dividends which the frm is under no legal obligation to pay. Callable common shares allow the firm the right to repurchase the shares at a prespecified price. Puttable common shares give the shareholder the right to sell the shares back to the firm at a pre-specified price. Preferred stock typically does not mature, does not have voting rights, and has dividends that are fixed in amount but are noi a contractuai obigation of the firm. Cumulative prefered shares require any dividends that were missed in the past (dividends in arrears) to be paid before common shareholders receive any dividends. Participating preferred shares receive extra dividends if firm profits exceed a prespecified level and a value greater than the par value if the firm is liquidated. Convertible preferred stock can be converted to common stock at a pre-specified conversion ratio. Question: Activity 1: Describe characteristics of types of equity securities Directions: Complete the Venn Diagram. ſdentfy the similarities and aifferences of the two generai types of equities. Success critería is provided at the key to correction. Common Shares Preference Shares CS Scanned with CamScanner
Transcribed Image Text:Reference: LT 1: Describe characteristics of types of equity securities Common shareholders have a residual claim on firm assets and govern the corporation through voting rights. Common shares have variable dividends which the frm is under no legal obligation to pay. Callable common shares allow the firm the right to repurchase the shares at a prespecified price. Puttable common shares give the shareholder the right to sell the shares back to the firm at a pre-specified price. Preferred stock typically does not mature, does not have voting rights, and has dividends that are fixed in amount but are noi a contractuai obigation of the firm. Cumulative prefered shares require any dividends that were missed in the past (dividends in arrears) to be paid before common shareholders receive any dividends. Participating preferred shares receive extra dividends if firm profits exceed a prespecified level and a value greater than the par value if the firm is liquidated. Convertible preferred stock can be converted to common stock at a pre-specified conversion ratio. Question: Activity 1: Describe characteristics of types of equity securities Directions: Complete the Venn Diagram. ſdentfy the similarities and aifferences of the two generai types of equities. Success critería is provided at the key to correction. Common Shares Preference Shares CS Scanned with CamScanner
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