Difference Between Common Stock and Preferred Stock
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Preference stocks do not carry any voting rights, and this is one of the main differences between common stock and preferred stock.
hese are also issued by the company to raise funds.
come with a maturity period
When a company is issuing preference shares, it specifies the dividend rate, maturity and the dividend payment date.
investors get regular dividends
In common stocks, dividends are not fixed and do not come in regular intervals.
A company has to pay dividends to preference shareholders first before dividends are paid to common stockholders.
has a higher claim than common stocks in case the company goes in for liquidation.
The shares that are regularly traded in the stock markets every day are common stocks.
. However, a company doesn’t need to pay dividends to its investors.
. The risk-reward ratio is high for common stocks
also get voting rights
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