key term - Preferred stock

Definition

Preferred stock is a type of equity security that offers its holders priority over common stock in the distribution of dividends and assets during liquidation. It often comes with fixed dividend payments but generally does not carry voting rights.

Related terms

Dividend: A portion of a company's earnings distributed to shareholders, usually on a regular basis.

Common Stock:

Equity securities that represent ownership in a corporation, offering voting rights but with dividends paid after those to preferred shareholders.

Liquidation: The process of converting assets into cash or cash equivalents by selling them, often done when a company is winding down or bankrupt