What is the difference between preferred stock and regular stock?
Preferred stock and common stock are issued by companies to investors who wish to own part of the company. Preferred stock holders get preference in payment of dividends and in case of bankruptcy or dissolution of the company. Preferred stocks normally pay a fixed interest or dividend; its price varies inversely with interest rates. An exception is when a preferred stock is convertible into the common stock. Then, there will be more of a direct relationship between the price of the common and the price of the preferred stock. Both preferred stock holders and common stock holders have voting rights.
Preferred stock and common stock are issued by companies to investors who wish to own part of the company. Preferred stock holders get preference in payment of dividends and in case of bankruptcy or dissolution of the company. Preferred stocks normally pay a fixed interest or dividend; its price varies inversely with interest rates. An exception is when a preferred stock is convertible into the common stock. Then, there will be more of a direct relationship between the price of the common and the price of the preferred stock. Both preferred stock holders and common stock holders have voting rights.
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