1. 2 Types of Stock
1. Preferred Stock--
-first to be paid dividends
-no vote for board
-guaranteed % return
2. Common Stock--
-last to be paid dividends
-gets vote for board

2. Two Methods of Growth
and Expansion
1. Mergers--The absorption
of one company by another.
Ex: Sears bought out K Mart.
All K Mart stockholders
get Sears stock.

3. 2. Consolidations--the
joining of two companies
to become a totally new one.
Ex: Chase National Bank and
Bank of Manhattan
become
Chase Manhattan Bank of NY

4. Three Types of Combinations
1. Horizontal Combination-
When several companies that
make the same types of products
join forces.
Ex. Daimler-Benz &Chrysler
Macy’s bought Goldsmith’s

5. 2. Vertical Combination-- firms taking part in different
steps of manufacturing join
together.
Ex: ExxonMobile locates, drills,
extracts deposits, then transports,
refines, and offers in stations.

6. 3. Conglomerate Combination-- firms selling different and
unrelated products join together.
Ex: Mitsubishi Corp. deals in
-cars, -electronics soft drinks
-banks -plastics -steel
-rayon -chemicals -paper
-glass cable -construction

7. Two Truths and a Lie:
John D. Rockefeller perfected the vertical combination by buying up most of the other oil companies.
Kimberly Clark is a conglomerate because it owns companies that produce paper towels, diapers, wipes, paper towel dispensers, cleaning supplies, rubber gloves,
Air fresheners/dispensers and other products for home and office.
Preferred stock is much more expensive than common stock but at least you are guaranteed to make a certain rate of return when holding the stock.