O'Reilly logo

The Investment Assets Handbook: A definitive practical guide to asset classes by Yoram Lustig

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 3: Preferred stocks

Preferred stocks or preferreds are technically an equity security and as such are a class of ownership in a corporation. Preferreds are generally considered a hybrid instrument as they have characteristics of both equity and debt.

Preferred stocks and bonds

Similarities

Preferreds share a few similarities with bonds. Preferreds are issued with a fixed par value and pay dividends based on a percentage of that par at a fixed rate. Just like bonds, which also make fixed payments, the market value of preferred shares is sensitive to changes in interest rates. If interest rates rise, the value of the preferred shares would need to fall to offer investors a better, competitive rate. If rates fall, the opposite would ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required