A firm's founder sells equity to outside investors for the first time in the form of preferred stock. In what way is this preferred stock most likely to differ from the preferred stock issued by an established public firm?

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A firm's founder selling equity to outside investors for the first time is referred to as an initial public offering (IPO). In an IPO, the preferred stock issued by the firm is most likely to differ from the preferred stock issued by an established public firm in that it is unlikely to pay cash dividends. This is because newly-public companies typically reinvest their profits back into the business to fuel growth rather than paying dividends to shareholders. Other differences could include a lower dividend rate, a lack of seniority in liquidation, and the ability to convert to common stock, but these are not necessarily true for all newly-public companies.

A Firm's Founder Sells Equity to Outside Investors for the First