ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Preferred stocks pay a fixed dividend to shareholders, are prioritized in the event of bankruptcy, and are less impacted by market fluctuations than common stock. Preferred stocks are typically purchased for their consistent dividend payments, which offer less financial risk to shareholders than common stock.

Detailed explanation-2: -This type of share is usually implemented for individuals who want to invest in the company’s profitability and success at the expense of voting rights in the direction of the company. Preferred stock typically has non-voting qualities.

Detailed explanation-3: -A zero-dividend preferred stock is a preferred share issued by a company that is not required to pay a dividend to its holder. The owner of a zero-dividend preferred share will earn income from capital appreciation and may receive a one-time payment at the end of the investment term.

Detailed explanation-4: -Risk. Generally, preferred stocks are rated two notches below bonds; this lower rating, which means higher risk, reflects their lower claim on the assets of the company.