Preferred stock (also called
preferred shares,
preference shares or simply
preferreds) is a type of
stock which may have any combination of features not possessed by common stock including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument. Preferred stocks are senior (i.e., higher ranking) to
common stock, but subordinate to
bonds in terms of claim (or rights to their share of the assets of the company) and may have priority over common stock (ordinary shares) in the payment of dividends and upon
liquidation. Terms of the preferred stock are described in the articles of association.