What are the different types of preferred shares?

There are four kinds of preferred shares: convertible, callable, cumulative, and participatory. All of them offer unique benefits to the holder. While preferred stock shares some similarities with common stock and bonds, there are a few key differences as well.

Are preferred stock shares a form of equity?

And like common stock, preferred shares represent a form of equity in the company. Importantly, preferred stock shares offer some privileges that are not available to those holding common stock shares. For example, preferred stockholders have a greater claim on assets in the event of a liquidation. They also have a greater claim on dividends.

What is preferred stock?

Preferred stock is sold at a par value and paid a regular dividend that is a percentage of par. Preferred stockholders do not typically have the voting rights that common stockholders do, but they may be granted special voting rights. Preferred stock provides a simpler means of raising substantial capital than the sale of common stock does.