One difference between common and preferred stock is that preferred stock
A) does not pay dividends.
B) offers more predictable income and more safety.
C) has greater potential for capital appreciation.
D) is issued more frequently than common stock.

Question

Quizplus · Accepted Answer

Preferred stock typically offers investors more predictable income through fixed dividend payments and a higher priority in receiving payments in the event of liquidation. This makes it a safer investment option compared to common stock. However, it generally has lower potential for capital appreciation compared to common stock. Option A is incorrect as preferred stock does indeed pay dividends. Option C is incorrect as it is typically common stock that has greater potential for capital appreciation. Option D is incorrect as preferred stock is issued less frequently than common stock.

One Difference Between Common and Preferred Stock Is That Preferred