TeachMeFinance.com - explain Deferred stock
Deferred stock -- Stock which is to realize no dividend until
some future contingent event, as when the net earnings shall
have amounted to more than enough to pay a dividend on the
common stock. Deferred stock is rarely issued in the United
In Great Britain when an ordinary (common) stock has
been divided into two parts, one part, called deferred, receives
no dividend until the other part, called preferred, has received
a dividend at a fixed rate. The deferred stock is called A
stock and the preferred stock is called B stock .
This B or preferred stock is not the same as preferred stock
in the United States. What in the United States is called preferred
stock is in Great Britain called preference stock and
preference stock in Great Britain may be divided into two
or more classes called first preference, second preference, etc.,
just as preferred stock in the United States may be divided
into two or more classes called first preferred, second preferred,
etc. When, however, there is but one class of preference
stock ahead of an ordinary stock in Great Britain the B
or preferred stock is equivalent to second preferred stock in
the United States.
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