ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The main difference between preferred and common stock is that preferred stock gives no voting rights to shareholders while common stock does. Preferred shareholders have priority over a company’s income, meaning they are paid dividends before common shareholders.

Detailed explanation-2: -A preferred stock pays stockholders set dividend payments on a regular schedule, but does not have voting rights or as much potential for capital appreciation as common stock. Investors tend to buy shares of preferred stock for their consistent income and lower financial risk if a company faces losses.

Detailed explanation-3: -Preferreds have fixed dividends and, although they are never guaranteed, the issuer has a greater obligation to pay them. Common stock dividends, if they exist at all, are paid after the company’s obligations to all preferred stockholders have been satisfied.

Detailed explanation-4: -Preferred stock generally doesn’t carry voting rights. It’s issued by a company to raise capital without jeopardizing the controlling interests of the common stockholders.

Detailed explanation-5: -1. Perpetual Preferreds: This type of preferred share has no maturity date and pays a fixed dividend upon issue, usually declared and paid quarterly, as long as it remains outstanding. Shareholders of perpetuals do not have voting rights and the issuers of perpetual preferred stock can typically redeem the shares.