preferred stock

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Preferred stock

A security that shows ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of liquidation. Most preferred stock pays a fixed dividend that is paid prior to the common stock dividend, stated in a dollar amount or as a percentage of par value. This stock does not usually carry voting rights. Preferred stock has characteristics of both common stock and debt.

Preferred Stock

Stock in a publicly-traded company without voting rights, but otherwise with more rights than common shares. Preferred stocks receive dividends before common shares and sometimes have guaranteed dividends, while common shares only receive the leftovers. Preferred stocks also have a prior claim on capital in the event of liquidation; if the company is liquidated, all preferred shareholders must be paid off before a single common shareholder. Some preferred stocks are convertible, which means they can be changed into common shares at a certain ratio so that even preferred shareholders without voting rights have the possibility of gaining them. Preferred stocks tend not to appreciate as fast as common stocks.

preferred stock

A security that shows ownership in a corporation and that gives the holder a claim prior to the claim of common stockholders on earnings and also generally on assets in the event of liquidation. Most preferred stock issues pay a fixed dividend set at the time of issuance, stated in a dollar amount or as a percentage of par value. Because no maturity date is stipulated, these securities are priced on dividend yield and trade much like long-term corporate bonds. As a general rule, preferred stock has limited appeal for individual investors. See also auction-rate preferred stock, callable preferred stock, cumulative, floating-rate preferred stock, Monthly Income Preferred Securities, new money preferred, participating, preferred dividend coverage, prior preferred, remarketed preferred stock, second preferred.

Preferred stock.

Some corporations issue preferred as well as common stock.

Preferred stock can be an attractive investment because it typically pays a fixed dividend on a regular schedule. The share prices also tend to be less volatile than the prices of common stock.

In fact, preferred stock prices tend to move with changing interest rates in the same way that bond prices do. That's one reason this type of stock is sometimes described as a hybrid investment because it shares some characteristics with common stock and some with fixed-income securities.

What preferred stock doesn't generally offer is the right to vote on corporate matters or the opportunity to share in the corporation's potential for increased profits in the form of increased share prices and dividend payments.

Convertible preferred shares can be exchanged for a specific number of common shares of the issuing company at an agreed-upon price. The process is similar to the way that a convertible bond can be exchanged for common stock.

preferred stock

see PREFERENCE SHARE.

preferred stock

see PREFERENCE SHARE.
References in periodicals archive ?
Greenberg added, "I believe that the elimination of the outstanding Class B shares will improve corporate governance and will enable the Company to attract institutional investors that generally do not invest in corporations with outstanding supervoting stock.
The Ratner, Miller and Shafran families own 75% of the supervoting Class B common shares.
In connection with the reincorporation and pursuant to the merger, the holders of the outstanding shares of Class A and Class B Common Stock of the Company will each receive one share of Common Stock of the Surviving Corporation for every three shares of Class A and Class B Common Stock held by them, resulting in a one-for-three reverse stock split and the elimination of the supervoting Class B Common Stock.
The settlement agreement required that the Company (i) convene a shareholders' meeting before May 31, 2000; (ii) take steps to eliminate the supervoting class of stock which has for years insulated current management; and (iii) pay $2,000,000 to the plaintiffs to settle the claims (fortunately, this payment was covered by the Company's insurance carrier).
MeriStar seeks to authorize "declawed" preferred stock--preferred shares that will not be used for anti-takeover purposes and will not carry supervoting rights.
The Company had requested such holders to convert in order to eliminate the supervoting rights attendant to the Class B Common Stock.