Preferred Stock

 Preferred stock, also known as preference shares, is a type of stock that combines features of both common stock and debt securities. Like common stock, preferred stock represents ownership in a corporation. However, preferred stock also has a fixed dividend payment that must be paid to the shareholder before any dividends can be paid to common shareholders.

Preferred stockholders typically receive a fixed dividend payment that is specified in the terms of the stock. This dividend payment is typically higher than the dividend paid on common stock but is lower than the interest rate paid on debt securities such as bonds. In addition, preferred stockholders typically have priority over common shareholders in the event of a bankruptcy or liquidation, meaning that they are more likely to receive some of their investment back.

Unlike common stock, preferred stock typically does not come with voting rights. This means that preferred shareholders do not have a say in the day-to-day operations of the company, but they may be able to vote on matters that directly affect their investment, such as changes to the terms of the preferred stock.