Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 21: Q. 15 (page 484)

Outline the differences between common stock and preferred stock.

Short Answer

Expert verified

The stock owner have right to vote for major policy decisions.

The preferred stock owners must receive a specific amount of dividends.

Step by step solution

01

Introduction

The main distinction between common and preferred stock is that although preferred stock does not permit voting, common stock does. Because preferred shareholders require priority over a company's income, they receive dividends before common shareholders.

02

Explanation

The common stockholder seems to have the right to vote on important company policy decisions, which including board of director selections. Ordinary stockholders do not have voting rights, but they do own a piece of the company's income.

Special investors must receive a certain amount of dividend every period until common stockholders get anything.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In which of the following situation(s) will owners who supply factors of production be most likely to earn economic rents?

a. Highly elastic supply of the factor; highly elastic demand for the factor

b. Highly elastic supply of the factor; highly inelastic demand for the factor

c. Highly inelastic supply of the factor; highly inelastic demand for the factor

Suppose that one of your classmates informs you that he has developed a method of forecasting stock market returns based on past trends. With a monetary investment from you, he claims that the two of you could profit handsomely from this forecasting method. How should you respond to your classmate?

If administrators of government pension funds for public employees were to discover in a future yes that they had used a discount rate that was too high, who would end up having to ensure payment of promised pensions?

In Problem 21-6, that you have now operated your consulting firm for a year. At the end of the first year, your total revenues are $77,250. Based on the information in Problem , what is the accounting profit, and what is your economic profit?

Why do you think that people have experienced even more difficulties than usual in predicting the prices of shares of stock issued by individual companies?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free