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When you buy and sell preferred stocks, does it affect the common stock price?
Or when you buy preferred stocks, for example at 25 dollars a share, does the price increase a little, and when you sell it, does it decrease a little, in other words do you affect any price (common or preferred price i mean) of the shares.
If no, how the price of preferred stocks is determined?
3 Answers
- ?Lv 71 decade agoFavorite Answer
Preferred prices like the price of all securities depend on supply and demand. With preferreds it's relatively easy to price them because you are just pricing a credit-risky perpetuity. You assess the credit risk of the preferred and price it accordingly.
I have never heard that action trading preferreds influences the price of the common directly. I can make up some story like, preferred goes up indicates that people think the company is more creditworthy so the common responds using the preferred as a leading indicator, but I don't believe it. They will certainly be correlated but this is about good/bad news affecting both creditworthiness and equity value simultaneously.
- alpisLv 45 years ago
given which you asked those questions, you mustn't be "procuring and merchandising" in any respect. Edit: i'm getting thumbs down in this reaction. i'm the guy speaking experience to this poster. everybody he would be procuring and merchandising shares against is acquainted with much greater approximately it than him. Is it truly fantastic to in basic terms lead him to slaughter? Giving him a lecture approximately what favourite inventory is won't help something.
