Best Advantages and Disadvantages of favorite Stock

The Best Advantages of favorite Stocks (or favorite shares) are as follows:

1) The major profit for the issue of favorite stock is that it increases capital for a company without eschew the manage of the company.

2) It is more useful for corporate reorganization or restructuring (Corporate restructuring is the process of reconstructing a complete organization or some divisions of a corporation).

3) A favorite stock is more flexible in comparison to money owing when a company is financially upset or when it comes to missing a yearly payment.

The Main Disadvantages of favorite Stocks are:

1) A company financing with favorite stock is compelled to pay its shareholders a regular and fixed dividend.

2) The cost of favorite stock financing is usually higher than that of debt financing. Favorite shareholders are indemnified with a maximum return as they are willing to accept the added risk of buying favorite  stock rather than long-term debt.

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