The main difference(s) between a preferred stock in Company A that pays a $2.50 per share annual dividend and a common stock in Company A that also pays a $2.50 per share current annual dividend is (are)
A) the common stock has potential for price appreciation due to company earnings growth.
B) the common stock dividend may increase but the preferred dividend is generally fixed.
C) the common stock could lose value if the company performance were to suffer.
D) All of the above are real differences between preferred and common stock in the same company.

Question

Quizplus · Accepted Answer

Preferred stocks typically have fixed dividends and less potential for price appreciation compared to common stocks, which may see dividends increase with the company's earnings and can gain or lose value based on company performance. Thus, all the options listed are true differences between preferred and common stocks.

The Main Difference(s) Between a Preferred Stock in Company a That