Compare and contrast common stock and preferred stock
What will be an ideal response?
Answer: The primary reason that people invest in common stock is the potential for capital gains, or increases in the value of the stock over time. Common stock may or may not pay dividends. Common stock enables the shareholders to vote on certain major corporate decisions, including electing the board of directors.
Preferred stock is usually less volatile than common stock and may not have the same potential for capital gains. Holders of preferred stock do not have any voting rights in the corporation. Preferred stock pay fixed dividends and at higher rates than common stocks or bonds, so it is often attractive to those investors seeking a regular income stream and some appreciation of price.
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Barbara receives a current distribution consisting of $2,000 cash plus other property with an adjusted basis to the partnership of $2,300 and a fair market value on the date of the distribution of $7,000 . Barbara has a 10 percent interest in the partnership and her basis in her partnership interest, immediately prior to the distribution, is $5,000 . What is Barbara's basis in the non-cash
property received in the current distribution? a. $2,000 b. $2,300 c. $3,000 d. $7,000 e. None of the above
In the normal operation of business, you receive a check from a customer and deposit it into your checking account. With your bank statement, you are advised that this check for $775 is "NSF.". The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75 . During a bank reconciliation, you will
a. subtract both values from balance according to bank b. add both values to balance according to books c. add both values to balance according to bank d. subtract both values from balance according to books