Quote:
Originally Posted by Tron_fdc
Depends.
Preferred shares from a bank would be at (or near) the bottom as the risk of insolvency is low. This is also why the dividend rate is 5%.
Preferred shares from my start up company selling real estate in Detroit would be at the top, because I might get shot when I repo my next house project. My dividend rate is 80% though!
Higher risk=higher return.
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Well this is the wrong thread for this discussion, and I'm not taking a shot at you in any way here Tron, but I hate that high risk= high return idea. Its such utter BS, and yet its propagated constantly.
I would say in general fotze, that preferreds are right between bonds and common shares on that pyramid though.