What does "preferred stock" refer to in a company?

Preferred stock refers to a class of ownership in a company that typically provides shareholders with a higher claim on assets and earnings than common stockholders. This includes priority in receiving dividends, which are often paid at a fixed rate before any dividends are distributed to common stockholders.

Additionally, preferred stock usually does not come with voting rights, distinguishing it from common stock. It’s designed to offer investors a more stable income while providing less risk, as it often has claim preferences in the event of a liquidation. This special status regarding profit claims makes preferred stock appealing to investors looking for fixed income without the volatility that sometimes accompanies common stock investments.

The other options do not accurately capture the essence of preferred stock, as they either pertain to different securities or lack the specific characteristics that define preferred shares.