Word: Preferred Stock
Definition:
Preferred stock is a type of investment in a company. Holders of preferred stock get paid dividends (a share of the company's profits) before common stockholders do. However, they usually do not have the right to vote on company matters, unlike common stockholders.
Usage Instructions:
Context: You would use "preferred stock" when discussing investments or finance, especially when talking about how companies raise money.
Form: It is a noun. You can say "I bought preferred stock in that company."
Example:
Advanced Usage:
In financial discussions, you might compare preferred stock to common stock, pointing out that preferred stock is less risky because of the guaranteed dividends.
"Investors often choose preferred stock for its stability and priority in dividend payments, particularly in times of economic uncertainty."
Word Variants:
Different Meanings:
In general conversation, "preferred" means something that is liked more than another option. For example, "My preferred method of transportation is by bicycle."
"Stock" can also refer to goods available for sale in a store or warehouse, but in this context, it refers to shares in a company.
Synonyms:
Idioms and Phrasal Verbs:
There are no specific idioms or phrasal verbs that directly relate to "preferred stock," but you might hear phrases like "make a stock investment" or "buy stock," which refer to investing in shares in general.
Summary:
Preferred stock is a financial term that refers to a type of investment which provides certain benefits, like receiving dividends before common stockholders, but without voting rights.