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A preferred stock represents partial ownership of a firm (like a common stock). Relative to a common stock, it includes (1) a higher claim to dividends, (2) a greater claim to assets upon liquidation, but (3) has more limited voting rights.
Preferred stock dividends may be fixed or an adjustable-rate determined by common stock dividends, profits, or other factors identified by the firm’s board of directors. Like common stock, preferred stock may be purchased directly from the firm or on a brokerage.
Related Links
Investopedia article on preferred stock
Wikipedia article on preferred stock
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