Prior Preferred Stock

Dictionary Says

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 Says

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 Definitions

  • Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as ...
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  • Participating Preferred Stock

    A type of preferred stock that gives the holder the right to receive dividends equal to the normally specified rate that preferred dividends receive as well as an additional dividend ...
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  • Preferred Stock

    A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before ...
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    • Perpetual Preferred Stock

      A type of preferred stock that has no maturity date. The issuers of perpetual preferred stock will always have redemption privileges on such shares. Issued perpetual preferred stock will ...
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    • Blank Check Preferred Stock

      A method companies use to simplify the process of creating new classes of preferred stock to raise additional funds from sophisticated investors without obtaining separate shareholder ...
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    • Zero-Dividend Preferred Stock

      A preferred share that is not required to pay a dividend to its holder. The owner of a zero-dividend preferred share will earn income from capital appreciation and may receive a one-time ...
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    • Cumulative Preferred Stock

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    • Risk/Reward Ratio

      A ratio used by many investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns. This ratio is calculated mathematically by ...
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