Privately held for 18 years, Superior Chemicals Inc. has finally decided to go public. The owners are in the process of deciding whether to use debt or equity financing to finance growth after the initial public offering
-Buyers of Superior preferred stock will enjoy safer investments but not the upside potential of investment in the company's common stock.

Question

Quizplus · Accepted Answer

Preferred stock typically offers safer investment returns in the form of fixed dividends and priority over common stock in the event of liquidation, but it does not offer the same growth potential through price appreciation that common stock does.

Privately Held for 18 Years, Superior Chemicals Inc