Prior Preferred Stock

AAA

DEFINITION of 'Prior Preferred Stock'

A type of preferred stock with a higher claim on assets and dividends than other issues of preferred stock. If a firm did not generate enough money to fulfill all of its dividend schedule requirements, those holding prior preferred stocks have first priority.

INVESTOPEDIA EXPLAINS 'Prior Preferred Stock'

Since prior preferred stock holders have a higher claim on the dividends of a company during normal operations and a higher claim on assets during bankruptcy, these shareholders are subject to less risk than other preferred or common shareholders. As with many other lower risk investments, these stocks normally offer a lower rate of return relative to other forms of stock because they are subject to less risk.

RELATED TERMS
  1. Perpetual Preferred Stock

    A type of preferred stock that has no maturity date. The issuers ...
  2. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
  3. Blank Check Preferred Stock

    A method companies use to simplify the process of creating new ...
  4. Participating Preferred Stock

    A type of preferred stock that gives the holder the right to ...
  5. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  6. Risk/Reward Ratio

    A ratio used by many investors to compare the expected returns ...
Related Articles
  1. Stock Basics Tutorial
    Investing Basics

    Stock Basics Tutorial

  2. A Primer On Preferred Stocks
    Bonds & Fixed Income

    A Primer On Preferred Stocks

  3. How And Why Do Companies Pay Dividends?
    Investing Basics

    How And Why Do Companies Pay Dividends?

  4. Dividends, Interest Rates And Their ...
    Options & Futures

    Dividends, Interest Rates And Their ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center