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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Preferred Stock

Definition:

Stock of a company that has a higher position on the food chain than common stock. If the company liquidates and there's any money left after all the creditors are paid, holders of preferred stock get paid before the common shareholders.

Bonus question: how much do they get paid? Answer: up to the amount of the par value of the preferred stock.

P.S. Preferred stock was also the name of a cologne in the 1990s. Those were the days.