BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Callable shares have more risk than putable shares because the issuer can exercise the call option (which limits the investor’s potential gains) while the investor can exercise the put option (which limits the investor’s potential losses, assuming the firm is able to meet its obligation).

Detailed explanation-2: -Its price is usually more stable than common stock. Furthermore, it is more liquid than corporate bonds of similar quality. Preferred stock often has a callable feature that allows the issuing corporation to forcibly cancel the outstanding shares for cash.

Detailed explanation-3: -Investors who are willing to take a bigger risk for higher returns prefer equity shares. There is no burden on the company, as payment of dividend to the equity shareholders is not compulsory. Equity issue raises funds without creating any charge on the assets of the company.

Detailed explanation-4: -Callable preferred stock is a type of preferred stock that the issuer has the right to call in or redeem at a pre-set price after a defined date.

Detailed explanation-5: -Investing in preferred securities is subject to greater credit risk, limited voting rights, interest rate and liquidity risks. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk.