Preference Shares
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, non-cumulative, participating, and convertible. also called preferred stock.
Preferential Allotment
Preference given to existing shareholders of a parent company or group companies when shares are offered to the public in a newly floated company, as a sort of reward for belonging to the family. The application forms are different and clearly marked as preferential. some allotments are expected.
Premium Raid
When a company or an individual wishes to acquire a controlling interest in another company offer the shareholders of the target company offers an additional amount over the ruling market price of their shares to induce them to sell. The additional amount is the premium. Since the objective is not simply investment but control of the company, it is a raid.
Premium Issue
The issue of shares at a price above the face value of a share. The sum charged above the face value is the premium. This premium is supposed to be determined by the following factors like : the current book value of the share, the EPS, and the average market price over the last three years.
Price Gap
A term used in technical analysis when a share’s high and low during a day does not overlap the prices on the previous day. Such gaps tend to occur when the share is in an overbought or in an oversold position.
Pyramid Investment
it is an Investment promising very high returns, which are in effect paid out of fresh investment. As word of mouth spreads about the great profitability of the scheme, more and more investors are attracted. When this trend stops or the promoters find it unmanageable, or the government intervenes, the scheme collapses investors loss all.