Investing: Preferred stock has Advantages and Disadvantages

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Investing in Preferred Stocks has its own Advantages and Disadvantages. While the priority over dividend and capital repayments over common stocks might seem a lucrative scenario, it also involves certain risks. These instruments are sensitive to interest rate movements and have an inverse relationship with them just like bonds. However, the rate of change of preferred stock price with respect to changes in interest rates is much less volatile than their fixed income counterparts