what are preffered stocks?

Answer 1

Most stock issued by a company is common stock. Preferred stock is a "higher level". I know that if a company should go bankrupt, those with preferred stock are first in line to get any assets. Those with common stock share what is left thereafter.

Answer 2

First, there are stocks and bonds. Stock is an ownership interest in the company. Bonds are a debt, a loan to the company.

Preferred stock is a subcategory of stock, which has a "preference" when it comes time to issue dividends from the profits. There are different kinds of preferences.

First, the preference may or may not be "cumulative". Cumulative means if a stock has a preference for an amount of dividends each year, all prior years for which it has not been paid have to be caught up before the Common stock may be paid anything.

It also may or may not be "participating". To be non participating means that the amount of the preference is ALL they get, so if the stock does really well, non participating preferred may actually get less than regular common stock.