Preferred stock is referred to as a hybrid security because it has many characteristics of both common stock and bonds.

Name: Preferred stock is referred to as a hybrid security because it has many characteristics of both common stock and bonds.
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Preferred stock shares some similarities with both common stock and bonds. For example, like common stock, it represents ownership in a company, but like bonds, it typically pays a fixed dividend and has a stated par value.

Preferred Stock Is Referred to as a Hybrid Security Because