Question

What are the similarities between common stock and preference shares?

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Abdul-Rahim Taysir

Answer 1

hi

Below are few similarities:

1) Both are part of share capital in the company.

2) Claim on assets in both types is after debt security.

3) Both are unsecured kind of securities.

4) Both are source of raising funds for the company.

5) Dividends are paid on both kind of securities but its not a legal obligation for the company.

Thanks