Which best describes the difference between preferred and common stocks?

Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have

P

Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting

rights

Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed

dividends.

Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not

allowed dividends.

Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights

Explanation:

Both common and preferred stocks have the ability to obtain dividend.

But, the dividend would be distributed to the owner of the preferred stock before it distributed to the owner of the common stock. Not only that, when the company is somehow forced to sell its asset, the preferred stock owners would be the first ones that have the right to claim the sale. So basically, preferred stocks are considered to be safer compared to common stock.

This will eliminate the 3rd and 4th options.

In exchange of having more risk, the owner of common stocks are given with voting rights. These voting rights will influence the type of decisions that the management will take in the future. The more common stocks you have, the more influences you have in the voting process.

They do not give this right to the owner of the preferred stock.

This will eliminate the 1st option and only leave us with the 2nd option,