An equity instrument
showing ownership in a corporation
which gives the holder a claim, prior to the claim of common stockholder
s, on earnings
and also on corporate assets
in the event of bankruptcy
Most preferred stock
pays a fixed dividend
that is paid prior to the common stock dividend
. This dividend is either stated in a dollar
amount or as a percentage of par
This stock does not usually carry voting rights.
The stock shares characteristics of both common stock and debt. For ordinary individuals, preferred stock is not a good investment.