WHERE CAN YOU BUY PREFERRED STOCK?
Learn even more about this topic with the Encyclopedia of Personal Finance™
preferred stock through brokers or brokerage services. Alternatively, one can
buy a mutual fund that specializes in preferred stock. In both cases, you are
purchasing your preferred stock on the secondary market, where buyers and
sellers meet to trade their shares. The transactions occur either over the
counter or on one of the nation's organized stock exchanges?for
example, the New York Stock Exchange or American Stock Exchange.
You can purchase preferred stocks through a discount or
full-service broker. You will pay a sales commission for the transaction.
A full-service broker can also provide expert financial and securities advice.
If you work with a full-service broker, find out whether he or she specializes
in preferred stocks and can offer detailed information about them.
Many mutual funds own preferred stocks, especially income funds
and growth and income funds. However, they may also own other securities as
Investors sometimes buy preferred stock for the same reasons they
buy corporate bonds, since they, too, offer a fixed rate of return. Though they
definitely are stocks, preferred stocks often perform differently in the
marketplace than common stocks. When you are buying preferreds, it makes sense
to find a knowledgeable advisor.
Now, we'll examine a particular type of preferred