Preferred Stock : Preferred stock is a part of total share capital of the company. It is a class of title holders that carry some preference rights against dividend and returning of principal amount at the time of winding up of the company. These shareholders are paid fixed rate of dividend before any dividend is paid to common shareholders but they do not carry any voting rights. Common Stock: Common stock is a class of title holders in a company that carry risk against dividend but they are the real owners of the company as they carry voting rights and they can take part in the decision making process of the company. These shareholders have the right to receive dividend after preference shareholders and incase company goes bankrupt these stockholders will not receive their money until preference shareholders and creditors receive their unpaid amount. To explain: The differences between preferred stock and common stock.

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Chapter 7, Problem 2CC

Summary Introduction

Preferred Stock:

Preferred stock is a part of total share capital of the company. It is a class of title holders that carry some preference rights against dividend and returning of principal amount at the time of winding up of the company. These shareholders are paid fixed rate of dividend before any dividend is paid to common shareholders but they do not carry any voting rights.

Common Stock:

Common stock is a class of title holders in a company that carry risk against dividend but they are the real owners of the company as they carry voting rights and they can take part in the decision making process of the company. These shareholders have the right to receive dividend after preference shareholders and incase company goes bankrupt these stockholders will not receive their money until preference shareholders and creditors receive their unpaid amount.

To explain:

The differences between preferred stock and common stock.

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