Preferred Stock Fundamentals

What this video covers

• Why preferred stock is classified as equity, not debt, and what that means for bankruptcy priority
• How to calculate the fixed dividend using the $100 par value, and the trap of confusing it with the $1,000 bond par value
• Why preferred stock prices move inversely to interest rates, just like bonds, because of the fixed dividend
• The complete preferred versus common stock comparison: dividends, voting rights, growth potential, liquidation priority, price sensitivity, and preemptive rights
• Why preferred stockholders generally have no voting rights, and the single contingent exception
• The order of payment in corporate liquidation: bondholders and creditors first, then preferred stockholders, then common stockholders last
• Why preferred stock offers income stability but sacrifices growth potential, and how that trade-off shows up in suitability questions