Question

1. list of right that are given to Preferred stock holders.
2. Why would investors buy common stocks when preferred stock is available?

Answer 1

1) The rights which are given to Preferred Stock holders are:

a) the right to have dividend and prior to common stockholders

b) the right to convert to common stock

c) the right to participate in liquidation

d) the right to block the particular action of the company

e) the right to demand preference to future public offerings

f) the right to have all the information and right to inspect.

2) The investors buy common stocks when preferred stock is available because the common shares have more rights than the preferred stocks. The rights which preferred stock do not have are : Voting right ie. vote to elect the board of directors; Maximum dividend, if company declares, against fixed dividend with preferred stocks; Trading opportunities more existing with common stocks.