Final answer:
Owners of preferred stock receive preferential treatment when it comes to dividends, which are part of a company's profits distributed to shareholders. The amount of dividends received is proportional to the number of shares owned. Public company shareholders typically have voting rights that influence decisions like issuing stock or paying dividends.
Step-by-step explanation:
Of the two types of stock, owners of preferred stock receive preferential treatment regarding dividends. When a company pays dividends, it distributes a portion of its profits to its shareholders based on the number of shares they own. For example, if a dividend of 75 cents per share is declared, an owner of 85 shares would receive a payment for those shares. Stable companies like Coca-Cola and electric utilities often provide dividends, and investors may hold onto these stocks for years.
Decision-making pertaining to issuing stocks, paying dividends, or reinvesting profits depend on whether the firm is private or public. Shareholders are the individuals who own shares of stock in a firm, and in public companies, they have a say in major decisions through their voting rights, usually exercised during annual general meetings.