Changes

'''Preferred shares''' are a hybrid financial instrument having characteristics of both [[equity]] and [[debt]].

'''Preferred shares''' (also called '''preferred stock''') are a hybrid financial instrument having characteristics of both [[equity]] and [[debt]].

They are like debt, in that they will carry a specify [[dividend]] rate.  However, the payment of the dividend is not guaranteed.  A company that failed to make a preferred dividend payment would be viewed unfavorably by the market and it is likely all prices of all it's issued shares would fall.

They are like debt, in that they will carry a specify [[dividend]] rate.  But like equity, the payment of the dividend is not guaranteed.  However, dividends must be paid on preferred stock before holders of common stock can receive dividends (thus the name "preferred").

Other influences to the price of preferred shares include prevailing [[interest rate]]s for debt of similar risk will generate a premium or discount to the share price.  However, all those things that influence common shares, can  influence the price of preferred shares.

As such, a company that regularly pays dividends, but then fails to pay dividends on both common and preferred stock, is likely to be in financial trouble.

[[Category:Finance]]

[[Category:Finance]]

[[Category:Accounting]]

[[Category:Accounting]]