Which of the following is true regarding common and preferred stock?
A) Preferred stock is rarely issued.
B) Common stock is rarely issued.
C) Common stock is issued more broadly than preferred stock.
D) Preferred stock is issued more broadly than common stock.
E) Common and preferred stock are issued in the same amount.

Question

Quizplus · Accepted Answer

Common stock is typically issued more broadly than preferred stock. Common stock represents ownership in a company and typically carries voting rights, whereas preferred stock represents a fixed claim on a company's earnings and cash flows but does not carry voting rights. As a result, companies may issue preferred stock to a smaller group of investors who are seeking a fixed return, while issuing common stock more broadly to raise capital and allow for greater investor participation in the company's governance.

Which of the Following Is True Regarding Common and Preferred