Why would an investor favor a common share over a preferred share?
A)To obtain a bigger potential capital gain.
B)To obtain repayment of the face value at maturity.
C)To obtain a fixed dividend.
D)To obtain a fixed coupon payment.
E)To obtain a variable dividend

Question

Quizplus · Accepted Answer

An investor would favor a common share over a preferred share to obtain a bigger potential capital gain. Common shares have the potential for higher gains as they are more volatile and their value is dependent on the performance of the company. Preferred shares, on the other hand, offer a fixed dividend but have limited potential for capital appreciation.

Why Would an Investor Favor a Common Share Over a Preferred