preferred-stock

Vocabulary Word

Definition

'Preferred stock' is a special type of ownership in a company. It gives the owner certain rights, like getting paid before common stock owners if the company has to pay back its debts.

Examples in Different Contexts

In corporate financing, 'preferred stock' is used by companies to raise capital while minimizing dilution of control. A finance manager might discuss, 'Issuing preferred stock allows us to attract investors without giving away voting rights, preserving managerial control.'

Practice Scenarios

Tech

Scenario:

We're raising our next round of funding and want to attract investors who are looking for stable returns.

Response:

I recommend offering preferred stock in the next funding round. It's a great way to attract investors seeking stable returns.

Business

Scenario:

Our goal is to provide stable dividends to our shareholders while managing business risks effectively.

Response:

Diversifying our holdings with preferred stock will be a great way to ensure we continue providing stable dividends.