Final answer:
Preferred stock provides a specified dividend to its shareholders and typically does not grant voting rights, distinguishing it from common stock. Common stock may offer greater potential for price appreciation, but preferred stock offers more predictable income.
Step-by-step explanation:
Preferred stock differs from common stock in several key aspects. The most notable difference is that preferred stock generally provides for a specified dividend. This means that shareholders of preferred stock receive dividends at a set rate before any dividends are paid to common stockholders. In contrast to common stock, preferred stock usually does not come with voting rights, which means preferred shareholders typically do not have a say in shareholder votes or in electing the Board of Directors.
Additionally, while both types of stocks have the potential for price appreciation, there is no guarantee that preferred stock will increase in price faster than common stock; in fact, the common stock often offers greater capital appreciation potential because it is directly tied to the company's performance and prospects.