Stocks are susceptible to general market fluctuations, which may include volatile increases or decreases in value as market confidence in and perceptions of their issuers change.
If an investor held common stock or common stock equivalents of any given issuer, these instruments may be exposed to greater risk than if the investor held preferred stocks and debt obligations of the issuer.
Preferred stocks can be affected by interest rate and liquidity risks (described in adjacent glossary entries). Also note that preferred stock dividend payments are not guaranteed; some are subject to a call provision, meaning the issuer can redeem its preferred shares on demand, and usually when interest rates have fallen.