The expression "stock" alludes to possession or equity in a company.
There are two kinds of stocks - preferred stock and common stock.
Preferred stock investors have a higher case to profits or resource dissemination than common investors.
The subtleties of each preferred stock rely upon the issue.
Preferred stock investors get importance when compared to common stock investors when referring to dividend payments, which often yield more than common stock and can be paid month to month or quarter to quarter.
These dividend payments can either be fixed or set in terms of a benchmark interest rate such as the LIBOR. and are generally cited as a percentage in the issuing description.
Adjustable rate stocks specify some elements that impact the dividend yield, and participating shares can give out additional dividend payments that are reckoned in terms of common stock dividend payments or the organization's profits.
The choice to deliver the dividend payments is at the will of an organization's governing body.
In contrast to common stock investors, preferred stock investors have restricted rights which generally does not include voting rights.
Preferred stock combines features of debt, in that it gives out fixed dividend payments, and equity, in that it has the potential to rise in price.
This is attractive to investors looking for solidness in potential future cash flows.