Question

Compare and contrast common stock and preferred stock.

(5 marks)

Answer 1

Difference between common stock and preferred stock :-

• The main difference between preferred and common stock is that preferred stock gives no voting rights to shareholders while common stock does.
• Preferred shareholders have priority over a company's income, meaning they are paid dividends before common shareholders.
• Common stockholders are last in line when it comes to company assets, which means they will be paid out after creditors, bondholders, and preferred shareholders.