Q:

Why is preferred stock referred to as "preferred"?

A:

Quick Answer

According to Investopedia, preferred stock is called such because the stockholders receive preferential treatment when compared to common stockholders. This preferential treatment often includes guaranteed dividends not paid to common stockholders and first consideration for payouts of company assets to stockholders in case of bankruptcy.

Continue Reading

Full Answer

CNBC adds that unlike common stock, preferred stock does not offer voting rights with a company. Preferred stock and common stock may both appreciate in value, but the rate of appreciation of common stock is generally slower. Like common stockholders, however, preferred stockholders must wait in line behind company bondholders for payment of the stock's value in case of a company bankruptcy.

Learn more about Investing

Related Questions

  • Q:

    How do you detect and adjust for stock splits?

    A:

    To detect and adjust for stock splits, visit the official NASDAQ website and interpret the impact on a portfolio. Stock splits reduce the market share price of the associated security, according to the Houston Chronicle.

    Full Answer >
    Filed Under:
  • Q:

    How do you check the current Marketwatch stock quotes?

    A:

    MarketWatch’s homepage allows visitors to check current stock quotes from the most popular stocks without creating an account as of 2015, according to the company’s website. The tab next to the most popular stocks allows visitors to view the most recent stock quotes they viewed. There is a delay of 15 minutes for stock quotes on the Nasdaq and 20 minutes for all other exchanges.

    Full Answer >
    Filed Under:
  • Q:

    How do you find stock prices for MDISX?

    A:

    To find stock prices for MDISX, search the funds section of the MorningStar website, and enter the MDISX symbol. This fund contains holdings in several companies, such as Microsoft, Apple and Teva Pharmaceutical Industries.

    Full Answer >
    Filed Under:
  • Q:

    Why are institutional investors important?

    A:

    Institutional investors provide a large pool of funds that can be used by companies to raise capital through stock issues. Institutional investors also allow small investors to invest in a wide range of stocks by buying institutionally provided funds that aggregate stocks, rather than investing in each stock separately.

    Full Answer >
    Filed Under:

Explore