Preferred Stock

Preferred stock is the other form of stock available to the public besides common stock. It is a hybrid security that is a mixture of both bond and equity.

It usually has a fixed dividend payment and any dividend obligations to the preferred stockholders must be satisfied before dividend payments can be made to the common stockholders.

Unlike common stock, preferred stockholders usually has no voting rights and since dividend payments are fixed, they also do not get to participate in any capital gains.

However, in the event of liquidation, preferred stockholders are paid off before common stockholders.

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