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NEW QUESTION: 1
Common stock and preferred stock differ in that:
A. the firm is legally mandated to make the dividend payments on its preferred stock; there is no legal
obligation to make dividend payments on its common stock.
B. preferred stockholders will receive their part of the proceeds if the firm is liquidated before the common
shareholders receive anything.
C. preferred stockholders have more voting rights than the common stockholders of the firm.
D. common stock pays a fixed dividend while the dividend associated with preferred stock will typically
increase as the earnings of the firm increases.
Common stock and preferred stock differ in that preferred stockholders will receive their part
of the proceeds if the firm is liquidated before the common shareholders receive anything. Neither
preferred stock nor common stock dividends are legal obligations of the firm. Preferred stock typically
pays a fixed dividend that does not vary with the firm's earnings, while the common stock dividend may.
Except in special circumstances specified in the preferred stock agreement, preferred shareholders have
no voting rights.