Preferred stock
From Wikicpa
Preferred stock usually has a preference in the distribution of dividends and a preference in the distribution upon liquidation of the business assets. Many preferred stocks have a fixed par value and the right to a fixed rate of dividend distribution, stated as either a fixed dollar amount or a percentage of the stock's par value. Because preferred stocks can vary widely in their terms, some business enterprises have several classes of preferred stock.
Some preferred stocks have additional rights such as:
- Cumulative rights; they must receive a dividend distribution for all years prior to any common stock dividend.
- Voting rights; they are eligible to vote for the election of the board of directors.
- Redeemable or non redeemable features
- Convertible to common stock
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