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

Finance

Scenario:

Widening our financial portfolio might be a good idea to balance risk and return.

Response:

Preferred stock could be an ideal addition to our portfolio, providing stable dividends and mitigating risk.

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.