Question

Corporations generally issue both common stock and preferred stock. Explain the major differences between these two categories.

Answer 1

Major differences between common stock and preferred stock

Preferred stock	Common stock
1.Stock holders has no voting right	1. Stock holders has voting right
2.Investors have fixed dividend	2.Investors have variable dividend
3.These shares can be redeemed	3.These shares cannot be redeemed
4.These shares can be converted into fixed no of common shares	4.These shares cannot be converted
5.These holders have priority over a company's income ,meaning they are paid dividends before common share holders	5.Common share holders are last in line ,which means they will pay after preferred stock holders