Definition of Preferred stock:
The class of shares (shares) that pays fixed and regular interest is not profitable (the payment and amount depend on factors beyond the control of the shareholders). Preferred shareholders are entitled to the company's profits (and assets in liquidation) below (less than) the claims of ordinary shareholders (common shares), but below the claims of bondholders and all other lenders. Under the terms of the Preferred Shares Issue Agreement, the holder's control over the company's business extends from the level to the general shareholders. Most preferred shareholders are generally ordinary shareholders who cannot receive profits until interest is paid due to preferential shareholders. For the issuer, preferred shares represent a difficult balance between debt and equity and are considered capital with tax benefits, as interest is written off as expense versus profit. They are also called preferred shares.
For more information, see Shared Shares and Preference and Share Classes at InvestorGuide.com..
For shares entitled to a fixed profit, the payout takes precedence over the return on ordinary shares
How to use Preferred stock in a sentence?
- Companies may give preference to common shares, but ordinary shares are usually distributed among ordinary shareholders.
- Each company's rights have a classification structure that falls into three main types of securities issued by the company: bonds, preferred shares and common shares.
- The smartest thing is to buy preferred shares when they are available. Therefore, if companies make money or need to liquidate assets, they are paid out to ordinary shareholders.
- In this recipe, start with your favorite broth, which can be meat, poultry or vegetables, and is the base of the soup.
Meaning of Preferred stock & Preferred stock Definition