preferred stock
Definition
Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preferred stocks represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, a preferred stock pays a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preferred stock is that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred, non-cumulative, participating, and convertible. also called preference shares.
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Related Terms
stock, cumulative preferred, non-cumulative preferred, first preferred stock, second preferred stock, accumulated dividend, cumulative dividend, adjustable rate preferred stock, call price, common stock equivalent, convertible preferred stock, dividend in arrears, guaranteed stock, junior equity, participating preferred, warrant
'preferred stock
' appears in the definitions of these terms on BusinessDictionary.comsecond preferred stock, profitability ratios, fixed income investment, junior security, balanced mutual fund, and 
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