Preferred Stock

Discipline: Economics

Preferred Stocks, or preferred shares, entail the superior rights than common stocks.

The most important of such rights is that, in a case of bankruptcy, preferred stockholders are paid after creditors and before common stockholders.

The additional rights a preferred stock has over a common stock may differs from corporation to corporation, since it is typically the board of directors that determine the those rights.

Convertible preferred stocks give their holder the option to convert the preferred stocks to a fixed number of common shares at a predetermined conversion price.

Also see: common stock, stock

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