Chapter 10.2, Problem 4R

To determine

To state:The differences between common and preferred stock.

Explanation of Solution

Common stock holders enjoy voting rights in a company, whereas the preferred stock does not have voting rights.

The dividend in case of common stock totally depends on the company and varies according to the profits whereas in case of preferred stock, fixed dividend is given to the holders.

The rates of dividend are generally high in common stock as compared to the preferred stock.

Economics Concept Introduction

Introduction:Common stock and preferred stock one of the several ways through which businesses obtain money from the investors.

Preferred stocks have fixed rate of dividends whereas dividend varies in case of common stock.