Question

Which best describes the difference between preferred and common stocks?
Responses

Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights.
Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights.

Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.
Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.

Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends.
Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends.

Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have voting rights.

Answer 1

Common stock gives shareholders one vote per share owned, while shareholders of preferred stock typically do not have voting rights.

Explanation: preferred shareholders have priority over common shareholders for dividend payments and in liquidation, but usually lack voting rights; common shareholders vote on the board and have greater upside/downside potential.