Preferred Stocks

Preferred Stocks



Introduction

Preferred shares, also called preferred securities are typically higher in ranking than common stock, and its terms are negotiated between the corporation and the investor. It is a special type of stock that pays a fixed amount regularly drawn from the company profits or dividends. They are called preferred shares because they give priority to the holders of preferred stock regarding the payment of dividends. There are two types of preferred shares; cumulative and non-cumulative. For cumulative shares, if the company has not been able to pay dividends due to some financial instability or any other appropriate reason, ...