Types of Preferred Stock

What this video covers

• Why cumulative preferred must receive dividends in arrears before any current preferred or common dividends are paid, and what happens when declared cash runs short
• How to calculate dividends in arrears using stated rate and par value, and why they appear in footnotes rather than as balance-sheet liabilities
• The permanent loss feature of non-cumulative preferred: once a dividend date passes without declaration, the holder has no claim
• Why participating preferred receives two dividend layers, and why non-participating is the default for virtually all preferred stock
• How convertible preferred conversion ratio, conversion value, and parity prices are calculated, and when conversion creates economic gain
• Why convertible preferred pays a lower dividend than non-convertible, and why the conversion option is a one-way holder decision with no reversal
• Who holds the option power for callable versus convertible preferred, and why their dividend rates move in opposite directions as compensation