WHAT IS PREFERRED STOCK
There are usually two different types of Stock that a Corporation can issue, Common Stock and Preferred Stock. Some states also allow a Corporation to also issue Undesignated Stock.
Common Stock is what Corporations normally issue to Shareholders. Preferred Stock, on the other hand is more like a bond or promissory note. Preferred Stock carries a fixed dividend percentage rate.
Holders of Preferred Stock get paid dividends first. If there are profits left after paying the Preferred dividends, then dividends are paid to the Common Shareholders. That's why it's called Preferred stock - dividends on it are paid first. There is a drawback, however.
As a trade-off for getting dividends first, Preferred Shareholders usually do not get to vote on matters affecting the Corporation. Preferred Stock is usually nonvoting.
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