Final answer:
The biggest difference between common stock and preferred stock is the level of ownership and voting rights they provide to shareholders.
Step-by-step explanation:
The biggest difference between common stock and preferred stock is the level of ownership and voting rights they provide to shareholders.
Common stock represents equity ownership in a company and entitles shareholders to vote on certain matters concerning the company's management and operations. Common stockholders have the potential for higher returns through dividends and stock price appreciation, but they also have a higher level of risk.
On the other hand, preferred stock represents a hybrid between common stock and bonds. Preferred stockholders have a higher claim on the company's assets and earnings compared to common stockholders, but they usually do not have voting rights. Preferred stockholders also receive fixed dividends, which are typically higher than those received by common stockholders.