Strategic Financing for Discussion Essay Example for Free

Strategic finance for Discussion EssayPreferred short letter is defined as a type equity that has antecedency over common stock in terms of dividend payment and asset distribution in the showcase of liquidation. Basically it is a hybrid security that actually shares features with both debt and common stock. Further, it has the following features, convertibility to common stock, nonvoting right, and callability at the corporations option. However, its usage does not actually increase the probability of the firms bankruptcy. It pays dividend well(p) like common stock out of the firms after-tax income (Brigham Houston, 2009). In case the favourite(a) stock does not have a stated date of maturity, its cost is determined using the following prescript (Brigham Ehrhardt, 2013).Cost of the Preferred Stock = the dividend on Preferred stock/ (Price of Preferred stock/1-Flotation Costs)Whereby the price of preferent stock is basically the current market value while the floatation costs are the favored stocks underwriting costs which are usually given as a percentage. Firms that use preferred stock should include its cost in their weighted average cost of capital (WACC) formula (Brigham Ehrhardt, 2013).lead publicly-traded companies that have preferred stock in their capital structure includethe Statesn Capital power Corp. (NASDAQ AGNC)This is mortgage REIT that basically invests in agency securities that their interest and principal payments are usually guaranteed by US Government-sponsored entity (Federal National Mortgage Association) and the US Government agency (Government National Mortgage Association)Wells Fargo and Company This is an American multinational company that deals in banking and financial servicers hence providing mortgage, banking, credit card, insurance, investing, and commercial and consumer financial services.Bank of America Corporation This is an American multinational corporation that deals in banking and financial services a nd is has its headquarter in Charlotte, North Carolina.ReferencesBrigham, E. F., Houston, J. F. (2009). rudiments of financial management. Mason, OH South-Western Cengage Learning.Brigham, E. F., Ehrhardt, M. C. (2013). Financial management Theory and practice. Mason, Ohio South-Western.Source document