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Investors who acquire preferred stock Investors who acquire preferred stock.
A preferred stock is an hybrid of a stock and a bond. It is a stock in which the holders of the stock have no voting rights. Also, when dividends are being paid, preferred shareholders are paid before common shareholders. Creditors have preference over preferred shareholders.
Advantages of preferred stock
- Preferred stock investors usually receive a higher dividend compared with common shareholders.
- In the event of the liquidation of the business, preferred stock holders have a higher claim on an asset compared to common shareholders.
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