They can be common stock, preferred stock, warrants, cumulative preferred stocks, bonds, zero-coupon bonds, long term bonds (over 15 years) and any combination thereof.
Cumulative preferred stock requires that any past, omitted dividends must be paid to the preferred stockholders before the common stockholders will be paid any dividend.
For the cases of interest, when the dividend deferral on a cumulative preferred stock was not followed by a default, the losses were much lower: post-deferral valuations were around 38%.
First, preferred stock investors are knowledgeable about the survival and recovery prospects of cumulative preferred stock as shown by valuation of cumulative preferred stock following a dividend deferral.
