Question

An important difference between common stock and preferred stock is that A. preferred stockholders are entitled to their dividends before common stockholders. B. preferred stockholders can vote on major policy decisions and common stockholders cannot. C. common stockholders are entitled to a share of the profits but preferred stockholders are entitled only to the profits of​ above-normal years. D. common stock is sold to anyone while preferred stock is sold to other corporations only.

Answer 1

Answer: preferred stockholders are entitled to their dividends before common stockholders. (A)

Step-by-step explanation:

Common stock is a security which represents ownership in a corporation whilet common stock entitles the holder to a fixed dividend, and the payment takes priority than ordinary share dividends.

A difference between preferred stock and common stock is that preferred stock is with no voting rights. When it is time for a company to vote, preferred shareholders don't vote. Voting rights are for common stock holders.

Preferred shareholders have priority on the company's income, as they are paid their dividends before common shareholders are paid.