Corporate Bonds and Preferred Stocks

Paper Summary:

This paper takes a look at corporate bonds and preferred stocks, defining both types of investments, how they differ and their strengths and weaknesses. The paper examines and explains the many factors that must be considered before one can wisely make a decision regarding an investment in corporate bonds and preferred stocks, but suggests that both bonds and preferred stocks are considered relatively safe investments and provide slow, steady growth for investors. Next, the paper describes common stocks and how they work as an investment as well as the advantages and disadvantages of this type of investment. Finally, the paper takes a look at the accounts receivable and inventory aspects of financial management and explains their importance to both the management process and to investors.

Table of Contents
Common Stocks
Accounts Receivable and Inventory

From the Paper:

"Preferred stocks, a class of a company's equity, are cheaper to buy and more liquid than corporate bonds. Companies issuing preferred stocks often yield 8 percent or more. Preferred stocks are closer in kin to bonds than to common stocks. They pay a fixed dividend, their price tends to stay near their par value and they usually have no voting rights. They are called preferred stocks because they stand in line ahead of common shares when it's time to pay out dividends or liquidate the company. However, preferred stockholders do not get their dividends until the bondholders have been paid. Because of this, preferred stocks are slightly more risky than bonds issued by the same company; the stockholder is paid a little extra for assuming that risk. Large corporations and banks encourage preferred stocks."

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