24 THE WORK OF THE STOCK EXCHANGE 
company’s bonds have been repaid, preferred stockholders have 
the next call, and common stockholders must take what remains 
after preferred stockholders have been satisfied. 
There is in practice too wide a variety in the terms accord- 
ing to which preferred stocks are issued, to make generaliza- 
tions concerning them altogether easy. Some American com- 
panies issue “first” and “second” preferred stock issues, at the 
same or at different dividend rates. Many preferred stocks 
are in their indentures accorded features ordinarily associated 
with bonds, such as convertibility into common stock, or retira- 
bility at a price. Usually but not always preferred stocks in 
America have no vote. Some preferred issues acquire the vote 
in case their own dividends, or the common stock dividends 
are passed, or in case the ratio of company net earnings to the 
amount of the preferred dividend falls below a certain point. 
The truth is that preferred stock in America as abroad is 
really an intermediate form of security, partaking of the nature 
of bonds as well as common shares, and in all cases the careful 
investor in preferred stock should thoroughly study the exact 
provisions attending each particular security issue. Theoreti- 
cally, a preferred stock entails less risk, and is attended by 
greater stability in market price, than a common stock. Prac- 
tically, however, there are many exceptions to this rule. 
The Chief Forms of Securities.—A feature of securities 
frequently overlooked, yet highly important in its effect on 
Stock Exchange operations, is the form in which they are 
issued.” Essentially, there are three chief forms for securities: 
(1) “inscribed”; (2) “registered”; and (3) “bearer.” 
Inscribed securities are mainly peculiar to Great Britain, 
and are practically unknown in the United States. No security 
certificates at all are issued for them, and evidence of owner- 
ship depends directly and solely upon the entry of the owner’s 
name in the register of the issuing company or government. 
Transfer of such issues thus consists, not in the delivery of 
 ® Appendix If.