Posted by admin in Finance Friday, 13 May 2011 07:22 2 Comments
Please don’t guess. I need an answer from someone that knows what he or she is talking about. Thanks.
(1) you get paid interest while waiting for the stock to go up. The interest is probably higher than the dividend rate (if any).
(2) the dividend (if there is one) is not a legal obligation and can be cut if the board of directors decides the company is short of cash.
(3) in the event of liquidation, the bond holders have to be paid off in full (including and unpaid interest) before the shareholders get a penny.
While Ted is right, it all depends on how sound the company is — with bonds, too. Be careful. There are credit issues lurking in bonds, too.
(1) you get paid interest while waiting for the stock to go up. The interest is probably higher than the dividend rate (if any).
(2) the dividend (if there is one) is not a legal obligation and can be cut if the board of directors decides the company is short of cash.
(3) in the event of liquidation, the bond holders have to be paid off in full (including and unpaid interest) before the shareholders get a penny.
While Ted is right, it all depends on how sound the company is — with bonds, too. Be careful. There are credit issues lurking in bonds, too.