Preferred Stock: Rapid Fire

What this video covers

• Why preferred stock is classified as equity, not debt, despite its fixed dividend and interest-rate sensitivity
• The liquidation priority order: secured creditors, unsecured creditors, subordinated debt, preferred, then common
• The five types of preferred stock: cumulative, non-cumulative (straight), participating, convertible, and callable
• Who holds the option: convertible is the holder's right, callable is the issuer's right
• Conversion ratio and conversion value calculations, and why conversion is a one-way street with no takebacks
• The cumulative dividend waterfall: arrears first, then current preferred, then common (if anything remains)
• Why preferred stock has no maturity date and cannot pull to par, making its interest-rate risk potentially greater than a bond's