A . What is the difference between common stock and preferred stock? b. If you are highly risk-averse, would you be more likely to invest in common stock or preferred stock? Explain
a . First, preferred stock does not carry voting privileges while common stock does. Second, the dividend
yield is fixed on preferred stock, but varies on common stock. Finally, owners of preferred stock
receive their dividends before any dividends are distributed to common stock owners.
b. Preferred stock is what you would invest in. The risk of holding it is smaller, since the dividend yield
is fixed, and since it has a prior claim on dividends.
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A) rise; fall B) rise; rise C) fall; fall D) fall; rise
Which of the following groups is largely responsible for carrying out the Fed's tasks of regulating banks and ensuring the health of the financial system?
a. FOMC b. the Board of Governors c. the New York Fed d. the regional Federal Reserve Banks