preference stock
"Preference stock" is a type of equity that offers holders certain privileges over common stock, particularly in dividends and liquidation claims.
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Definition
C1Corporate Finance
(technical, formal)Shares that provide priority in dividend payments and claims on assets during liquidation, but typically offer limited or no voting rights.
Example
- Investors often choose preference stock for its reliable dividend payments.
- In the event of company liquidation, preference stockholders are paid before common stockholders.
C1Investment
(technical, formal)A class of shares that combines features of both equity and debt, providing fixed dividends and higher claims on assets than common stock.
Example
- Preference stock can be an attractive option for those seeking a balance between income and capital appreciation.
- Convertible preference stock allows investors to exchange their shares for common stock under certain conditions.