Preferred Stock and Treasury Stock Assignment Help

Preferred Stock Assignment Help: It is also a type of source of financing that is used by the business organizations to raise funds from the market. Preferred stock equity is like a cross between long-term debt and common equity and it requires a fixed dividend payment to preferred shareholders. Preferred stock equity is similar to common stock in terms of rights of shareholders, but a preferred shareholder receives dividend before an ordinary shareholder. At present, most companies use common stock equity to generate finance as compared to preferred stock equity due to lower cost of financing or capital. The proceeds of preferred stock equity are used by the firms at start-up and growing stage to finance pre-revenue and early revenue operations of the business. Preferred stock provides investors certain advantages including current dividend preferences and a preference on asset distributions on liquidation of the corporation.

Treasury Stock Assignment Help: Treasury stock is the stock that a corporation issues and subsequently buys back in the open market. A corporation can hold the treasury stock, retire it or reissue it to improve the shareholder value. The value of each share is based on the value of the company and number of outstanding shares in the market. When a company buys back stock out of the market place, it changes the number of outstanding shares that increases the value of each share of stock and improves the company’s perception in the marketplace.

It is a signal to investors that the company has excess cash and they should invest in the company. Treasury shares simply reduce ordinary share capital. The possession of treasury shares does not give the company the right to vote, to exercise pre-emptive rights as a shareholder, to receive cash dividends and to receive assets on company liquidation. It cannot exceed the maximum proportion of total capitalization specified by law in the relevant country. Its main drawback is that some companies use treasury stock as a way to manipulate the value of their shares. The decision to buy back stock is seen as a way to support the stock price on undervaluation and utilize corporate funds to maximize the value for shareholders. A company may buy back public shares as a part of reorganization in condition of privatization or delisting from some particular stock exchange. Further, a company buys back shares and issues them to employees as stock award plan. Another motive for stock repurchase is to protect the company against a takeover threat.

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