Investors purchase preferred stock because preferred ________.

Question

Quizplus · Accepted Answer

Preferred stock is named as such because it has special rights and preferences over common stock. One of these preferences is a specified annual dividend payment. This dividend is typically paid out before any dividends are paid to common shareholders, and the dividend payment is usually fixed or calculated as a percentage of the stock's par value. This makes preferred stock an attractive investment option for those who want a steady stream of income without the risks associated with common stock.

Investors Purchase Preferred Stock Because Preferred ________