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Meaning / Definition of

Preference Shares

Categories: Stocks, Fundamental Analysis, Accounting,

capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock. also called preferred stock.

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Definition / Meaning of

Structured Product

Categories: Stocks, Investing and Trading,

financial institutions create investment products, known generically as structured products, that trade on a stock exchange and link the return on an investor's principal to the performance of an underlying security, such as a stock or basket of stocks or to a derivative, such as a stock index.For example, the return on debt securities known as structured notes is determined by the performance of a stock index such as the Standard & Poor's 500 (s&p 500) rather than the market interest rate. The objective is to provide the potential for higher returns than are available through a conventional investment.Each product has a distinctive name, often expressed as an acronym, and its terms and conditions vary somewhat from those offered by its competitors. For example, in some cases the principal is protected and in others it isn't. But some features are characteristic of these complex investments - their value always involves an underlying financial instrument and they require investors to commit a minimum investment amount for a specific term, such as three years.

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