Stocks: Stock Market and Preferred Shareholders Essay

Submitted By Precious5285
Words: 319
Pages: 2

Preferred stock is stock that has a dividend that must be paid out before other dividends. This stock must be paid out to stockholders and the shares that do not have voting rights. Each corporation is different in how the operate and what kind of stock options they have. Though typically, if you are a preferred shareholder, you have to give up your voting rights in business decisions. It is important to remember that preferred shareholders almost always have priority over common stockholders on any and all earnings and assets if liquidation is to occur. I prefer to think of preferred stock as a product that has fixed dividends and potential appreciation. Preferred stock comes with certain benefits like being the first to be paid during liquidation, and being guaranteed the dividend rated. Preferred stock holders will always trump common stock.
In many ways, preferred stock is the same as common stock in that they are both traded through companies, both represent a portion of the company’s earnings, and both can be transferred into cash. Preferred stock is one way that the company can raise capital for its growth. I would chose common stock for the voting privileges and preferred stock for the main fact that I would get my shares before the liquidation could occur. It is a good reassurance.
In conclusion, preferred stock is stock handed to preferred shareholders before anyone else gets their shares. This eliminates their right to vote. I would rather be able to…