Second Company's preferred stock is 8%, cumulative. A provision of the stock agreement specifies that the stock must be redeemed at face value in five years. Required It appears that the loan payable of First Company and the preferred stock of Second Company are very similar. What are the differences between the two securities

Answer and Explanation:

In a normally way, the loan payable for the first company and the second company preferred stock displayed very same to each other but still has some differences that are as follows:

a.  The loan payable is the liability where the company is bound to pay together with the interest within the prescribed time period

b. The dividend is an expense that could arise at the time when the dividend is declared

c. There is no liability when the dividend until declared but in the case of the interest, the liability arise as soon when the loan is given

d. The loan payable should be the right that against the assets but for the same there is no right provided to the shareholders until the company declared the dividend

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