Preferred stock is called preferred because it usually has two preferences over common stock.These preferences relate to:

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Preferred stock usually has preferences over common stock related to dividends and distribution of assets if the corporation is dissolved. Preferred stockholders receive their dividends before common stockholders and have priority in receiving their share of assets if the corporation is liquidated. They typically do not have voting rights, unlike common stockholders who typically have voting rights but lower priority in receiving dividends and assets. Par value and preemptive rights are not typically preferences given to preferred stockholders.

Preferred Stock Is Called Preferred Because It Usually Has Two