Preferred Stock

A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a pidend that must be paid out before pidends to common stockholders and the shares usually do not have voting rights.

The pcise details as to the structure of pferred stock is specific to each corporation. However, the best way to think of pferred stock is as a financial instrument that has characteristics of both debt (fixed pidends) and equity (potential appciation). Also known as "pferred shares".

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Taobiz explains Preferred Stock

There are certainly pros and cons when looking at pferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed pidend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appciation.