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Participating Preferred Stock
What is Participating Preferred Stock?
Preferred stock is a form of equity issued by a company. It its preferred because it takes priority over common stocks in that it has a higher-priority claim on assets in the event of bankruptcy and will be paid dividends before any common stockholders receive dividends. However, holders of preferred stock will not have any voting rights in the company.
Preferred stock can be thought of as a mixture of debt and equity, similar to convertible bonds. It has more financial power than common stock, but less risk than debt, and is usually higher priced and will rise in price less than both.
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