Why is preferred stock classified as a hybrid security?

World Stock Markets MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

PPSCFPSCNTSPakistan govt jobs
Subject
World Stock Marketsfinance-mcqs › world-stock-markets
Published
13 May 2023
Last updated
28 May 2026

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Explanation

Preferred stock is termed a hybrid security because it possesses characteristics of both equity and debt: it represents ownership in the company and pays fixed dividends periodically.

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