Generally the major difference between preferred shares and common shares is:
A)preferred shares are restricted by the amount of dividends that can be paid out.
B)common shares have a priority claim over corporate assets.
C)preferred shares have voting rights.
D)there are no significant differences between preferred and common shares.

Question

Quizplus · Accepted Answer

Preferred shares typically have a fixed dividend rate that must be paid out before any dividends can be paid to common shareholders, which restricts the amount of dividends that can be paid out. Common shares do not have this restriction. Option B is incorrect as common shares usually have a lower priority claim on corporate assets than preferred shares. Option C is also incorrect as preferred shares may not have voting rights, while common shares almost always do. Option D is incorrect as there are significant differences between preferred and common shares.

Generally the Major Difference Between Preferred Shares and Common Shares