Professional Documents
Culture Documents
Hybrid Financing: Preferred Stock, Warrants, and Convertibles
Hybrid Financing: Preferred Stock, Warrants, and Convertibles
Ch 19
How does preferred stock differ from
common stock and debt?
• Preferred dividends are specified by contract
• Advantages
– Dividend obligation contractual
– Avoids dilution of common stock
• Disadvantages
– Preferred dividends not tax deductible, so
typically costs more than debt
How can a knowledge of call options
help one understand warrants and
convertibles?