Equities

Question 1

Series K Preferred Stock

Answer 1

Characteristics:

• It’s issued by a financial service company.
• It has no maturity date.
• It pays a fixed rate for a period and then switches to a floating rate (usually based on the Secured Overnight Financing Rate, or SOFR).
• Its dividend is non-cumulative and it may not carry voting rights.
• It’s callable at the option of the issuer.

Series K preferred stock is suitable for an investor who’s seeking a high fixed dividend for a period followed by a floating rate dividend. An investor who’s seeking capital appreciation based on the increasing value of the common stock should consider convertible preferred stock, not K shares.

Question 2

Classified Common Stock

Answer 2

Classified common stock has unique privileges that other common shareholders are not provided. One of the most common types of classified common shares carries extra voting rights, which are referred to as “super voting rights.” These super voting shares are often created by founders of companies so that they’re able to keep control of their company, even after going public.