Question

The advantages of preferred stock over common stock are:

a. preferred stock is never a better option than common stock
b. less volatile prices and more reliabile dividends
c. less volatile prices and guaranteed payback at the end of 10 years
d. easier to find on the open market and more reliable dividends

Answer 1

Preferred stock offers advantages like less price volatility and more reliable dividends compared to common stock, representing a better option for investors seeking stability over potential growth.

Step-by-step explanation:

The advantages of preferred stock over common stock include having less volatile prices and more reliable dividends. Contrary to common stock, preferred stock typically offers fixed dividend payments and carries less risk as it does not fluctuate in value as much as common stock. Preferred shareholders also generally have a higher claim on assets than common stockholders in the event of liquidation, though they usually do not have voting rights.