Explore BrainMass

Explore BrainMass

    Common and preferred stock

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What are some similarities and differences between common stock and preferred stock? As a shareholder, would you want preferred or common stock? Why? As a corporation, would you rather issue preferred or common stock? Why?

    © BrainMass Inc. brainmass.com June 3, 2020, 7:59 pm ad1c9bdddf

    Solution Preview

    Preferred and common stocks are different in two key aspects.

    First, preferred stockholders have a greater claim to a company's assets and earnings. This is true during the good times when the company has excess cash and decides to distribute money in the form of dividends to its investors. In these instances when distributions are made, preferred stockholders must be paid before common stockholders. However, this claim is ...

    Solution Summary

    The solution evaluates common stock and preferred stock in detail.