What’s The Difference between Ordinary Shares and Preference Shares?
As an Preference Shares holder you have special rights.
They are the first to get paid if the business is wound up.
Furthermore, Ordinary shareholders are entitled to receive dividends if any are available after dividends on preferred shares are paid.
Most preference shares pay dividends or some sort of preferance such as more voting rights or what not. They are usually only issued in blocks insted of singles since you only have a certain amount of the shares to begin with you want to limit the quantity of those.
Preference shares (as the name suggests) get their dividends (and return of capital on wind up) paid first before ordinary shares.
But on the other hand preference shares dividends are usually limited to a set figure. In this respect they are more like corporate bonds. So "prefs" as they are known are something in between shares and bonds as investments.
You might be interested in this hub which goes into more detail:
http://cruncher.hubpages.com/hub/What-a … -you-money
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