Products & Their RisksQuestion 1 of 398
Which statement best describes a key difference between common stock and preferred stock?
a.Common stock always pays a fixed dividend, while preferred stock does not
b.Common stockholders normally have voting rights, while most preferred stockholders do not
c.Preferred stock gives holders the right to vote for the board, while common stock does not
d.Common stock has a stated maturity date, while preferred stock is perpetual
Explanation
Common shareholders typically vote on corporate matters such as electing directors, while preferred shares generally carry no vote in exchange for a fixed, priority dividend. Preferred dividends are fixed, not common ones, so the first choice is reversed. Neither security has a maturity date, so the last choice is wrong.
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