An equity instrument showing ownership in a corporation which gives the holder a claim, prior to the claim of common stockholders, on earnings and also on corporate assets in the event of bankruptcy and liquidation.

Most preferred stock pays a fixed dividend that is paid prior to the common stock dividend. This dividend is either stated in a dollar amount or as a percentage of par value.

This stock does not usually carry voting rights.

The stock shares characteristics of both common stock and debt. For ordinary individuals, preferred stock is not a good investment.