Because preferred stock is a form of ownership and has no maturity date, its claims on income and assets are secondary to those of the firm's creditors.

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Preferred stock is a form of equity ownership, meaning that holders have a claim on a company's assets and earnings after the claims of creditors have been satisfied. However, because preferred stock does not have a maturity date, its claims are ranked below those of the company's debt holders in the event of bankruptcy or liquidation.

Because Preferred Stock Is a Form of Ownership and Has