Guaranteed Stock

Posted in Finance, Accounting and Economics Terms, Total Reads: 466
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Definition: Guaranteed Stock

An unusual form of stock of company for which the dividends are guaranteed by a third party in case the stock issuer defaults.


A guaranteed stock can be preferred by investors due to its guaranteed dividends but it may carry premium over the price due to the cost of guarantee by a third party.


Generally, companies pay dividends when they make profit. But, for guaranteed stocks, the investors will receive dividends even if the company earns no profit.

 

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