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Meaning / Definition of

Securitized Bond

Categories: Finance,

Bonds, whose interest and principal payments are backed by the cash flows from a portfolio or pool of other assets, are called securitized bonds. securitization allows for an organization (such as a bank) transfer risk from its own balance sheet to the debt capital markets through the sale of bonds.For example, a mortgage bank might use the cash inflows on its current mortgage book, to issue bonds. The cash raised from the sale of these bonds would then be used to issue new mortgages. This process is cyclic allowing the mortgage bank to increase its operational leverage. This type of securitization is known as a mortgage backed security (MBS).

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Definition / Meaning of

Preference Shares

Categories: Stocks, Fundamental Analysis, Accounting,

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 stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock. also called preferred stock.

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