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## Preferred Stock

Preferred Stock is a simple straight preferred stock that does not have additional features, such as those found in convertible, retractable, and callable preferred stocks.

A preferred stock is a type of stock that provides dividends prior to any dividend paid to common stocks. Apart from having preference for dividend payouts, preferred stocks generally will have preference of asset allocation upon insolvency of the company, compared to common stocks. Because of these preferences, preferred stock is generally considered to be more secure than common stock and similar to a debt financial instrument, i.e., a bond. Despite the similarities, bonds do have preference for the same reasons and are generally considered more secure, ceteris paribus.

## $\frac{d}{r}$

Here,d=dividend,r=discount rate.

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