Preferred stock (Preference Shares)

Preferred stock are equities (capital stock) which gives the holder the right to a fixed dividend  (usually a fixed percentage of the nominal value of the share) from the earnings of the company.

Preferred stocks are generally referred to as a hybrid instrument, meaning it bears properties of both equity and debt instrument. Preference shareholders are given a higher priority than common stockholders when it comes to liquidation and distribution of firm’s earnings. The preferential treatment is that preference shareholders are given precedence over ordinary shareholders with respect to the distribution of the firm’s earnings as well as the distribution of assets in the event of liquidation.
[Read more…] about Preference Shares (preferred stock)