Preferred shares are generally more risky than common shares because interest rates may drop and preferred shareholders will then earn less on their investment than they originally expected.

Question

Quizplus · Accepted Answer

Preferred shares are generally less risky than common shares because they have fixed dividends and priority over common shares in the event of liquidation. However, they are sensitive to interest rate changes, which can affect their market value, but this does not make them riskier than common shares.

Preferred Shares Are Generally More Risky Than Common Shares Because