Preferred shares are a hybrid between common shares and long-term debt.

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Preferred shares have some characteristics of both common shares and long-term debt. Similar to debt, preferred shares generally have a fixed dividend that must be paid out before any dividends can be paid to common shareholders. However, like common shares, preferred shares do not have a maturity date and do not involve a contractual obligation to repay the capital.

Preferred Shares Are a Hybrid Between Common Shares and Long-Term