Question

What is a cash right? What are those of debt and equity? What are the following types of debt; straight, convertible, secured, senior or unsecured? Research the internet and report an example of each type issued by public companies. What is the difference between common stock and preferred stock?

Answer 1

Cash right is the right of all the things which can be bought by cash at any time or at the present time.

Cash rights can be majorly used for debts as well as equity.

Straight debt Any debt that cannot be changed into something else

Eg a regular bond is a straight debt as it cannot be converted or featured beyond interest payment.

Convertible debt is a type of bond where holder can convert into a specified no of shares of common stock. Hybrid security with debt and equity features

Secured bond is a debt backed by collateral security

Senior bond is a bond that takes priority over other unsecured bonds

Unsecured bond where the debt is not secured by any security and holds last position in terms of repayment.

Major differences between common stock and preferred stock is there is no voting rights available to preferred stock holders, however preferred stock holders enjoy priority over income.