Changes

'''Preferred shares''' (also called '''preferred stock''') 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.  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").

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"); if a preferred dividend is missed, all dividends in arrears must be paid before dividends can be paid on common stock. 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.

 

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]]

[[Category:Investments]]

[[Category:Investments]]