Preferred stock is an equity security with preferences
Like bonds, preferred shares also have a par value which is affected by interest rates. When interest rates rise, the value of the preferred stock declines, and vice versa. With common stocks, however, the value of shares is regulated by demand and supply of the market participants. PS may be convertible into shares of common stock at a specified conversion price. In most cases, conversion is at the option of each preferred stock holder. It has the downside protetion of preferred stock and the upside potential of common stock.