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What is NCPS

  Non-convertible Preference Shares (NCPS) pays a fixed dividend. It operates somewhat like bonds but it is higher risk in that it is a form of share and not loan or bond. In the event of the issuing company going bankrupt, loans and bonds will get paid first before NCPS. The dividend yield of NCPS is therefore usually higher than bond yield because of this higher risk. Its payment is ranked above ordinary shares. However, NCPS generally does not enjoy capital appreciation like ordinary shares. The price does change as interest rate changes like bond. It is basically a product for the more conservative investors or those who want fixed income to cushion the risk of investing in stocks and shares.



Hope this helps.

 

Hi,

Can someone explained what is NCPS (other than what it stands for) - that is how it works and the risk involve in holding or trading NCPS ?

David