Preferred stock意思

"Preferred stock" is a type of stock that has certain preferences over common stock in terms of dividend payments and asset distributions in the event of a company's liquidation. Here are some key points about preferred stock:

1. Dividend Payments: Preferred stock typically pays a fixed dividend, which means that the company pays a set amount of dividends per share on a regular basis. This is different from common stock, where dividends can vary and are not guaranteed.

2. Liquidation Preference: In the event that a company goes out of business and liquidates its assets, preferred stockholders have priority over common stockholders when it comes to receiving payment. However, they are still below debt holders (such as bondholders) in the priority order.

3. Voting Rights: Preferred stock usually has limited voting rights compared to common stock. While common stockholders have the right to vote on company matters and elect the board of directors, preferred stockholders may only have the right to vote in specific situations, such as when the company decides to change the terms of the preferred stock.

4. Redeemable and Convertible: Some preferred stocks are redeemable, which means the company can buy them back at a certain price after a certain date. Others are convertible, meaning they can be converted into a certain number of shares of common stock at the holder's option or under specific conditions.

5. Tax Treatment: Dividends from preferred stock are usually taxed as ordinary income, unlike dividends from some municipal bonds or certain types of mutual funds, which may be tax-exempt or tax-deferred.

Investors may choose preferred stock for its stability and regular income, as well as for the potential for capital appreciation if the stock price increases over time. However, preferred stock is still a type of equity investment and carries some of the same risks as common stock, such as the potential for price volatility and loss of principal.