Preferred Stock

Preferred stock (also called preferred shares, preference shares or simply preferreds) is an equity security with properties of both an equity and a debt instrument, and is generally considered a hybrid instrument. Preferreds are senior (i.e. higher ranking) to common stock, but subordinate to bonds in terms of claim (or rights to their share of the assets of the company).

Preferred stock usually carries no voting rights, but may carry a dividend and may have priority over common stock in the payment of dividends and upon liquidation. Terms of the preferred stock are stated in a "Certificate of Designation".

Similar to bonds, preferred stocks are rated by the major credit-rating companies. The rating for preferreds is generally lower, since preferred dividends do not carry the same guarantees as interest payments from bonds and they are junior to all creditors.

Read more about Preferred StockFeatures, Types, Usage, Users

Other articles related to "preferred stock, preferred, stock":

Securities Market - Main Financial Instruments - Stocks (shares) - Preferred Stock
... Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights ... (This may vary depending on the company.) With preferred shares investors are usually guaranteed a fixed dividend forever ... This is different than common stock, which has variable dividends that are never guaranteed ...
Capital Assistance Program - Features of The Program
... Money is given in exchange for preferred stock that pays a 9 percent dividend ... The preferred stock is automatically converted into common stock at the end of seven years ... funds will be restricted in paying dividends, buying back their stock, and buying other firms with cash ...
Troubled Asset Relief Program - Timeline of Changes To The Initial Program
... The Treasury announced their intention to buy senior preferred stock and warrants from the nine largest American banks ... executive compensation in excess of $500,000 for each senior executive." The Treasury also bought preferred stock and warrants from hundreds of smaller banks ... The first allocation of the TARP money was primarily used to buy preferred stock, which is similar to debt in that it gets paid before common equity shareholders ...
Capital Purchase Program
... The Capital Purchase Program or CPP is a preferred stock and equity warrant purchase program conducted by the US Treasury's Office of Financial Stability ... financial institutions through purchases of preferred stock." Because preferred stock is similar to debt in that it gets paid before common stock, some economists have questioned whether the buying ... billion dollars would include restrictions on the payment of common stock dividends and executive compensation ...
Preferred Stock - International Perspectives - Other Countries
... Czech Republic – Preferred stock cannot be more than 50 percent of total equity ... France – By a law enacted in June 2004, France allows the creation of preferred shares ... Brazil – In Brazil, up to 50 percent of the capital stock of a company may be composed of preferred stock ...

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