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First-Preferred Stock Definition

Definition

The word first-preferred stock describes your security that’s seniority over the other styles of equity issued with a business. First-preferred stock receives preferential treatment concerning dividend payments in addition to assets in case of liquidation.

Explanation

First-preferred stock can be really a security that gives holders with all an very first claim to volatility. This implies investors are going to receive their paychecks before common stockholders along with other favorite stock issued by the business. At case of liquidation, first-preferred stock has a promise to resources which is more advanced than additional equity holders. But, first-preferred stock remains weak to bond-holders, meaning lenders have an exceptional claim to resources.

In addition to all the above mentioned attributes, first-preferred inventory will typically incorporate a predetermined dividend amount, typically defined as a proportion of their security’s level price. However some preferred stocks may possibly have special voting rights, but such problems normally don’t incorporate this particular feature.