SIE practice questionmediumCommon Stock vs Preferred
Compared to preferred stockholders, common stockholders:
- AAlways have greater voting rights.
- BHave a guaranteed dividend.
- CMay receive higher long-term returns, but assume more risk.✓ Correct answer
- DHave a prior claim on assets in liquidation.
Explanation
Why C — May receive higher long-term returns, but assume more risk.
Common stock has higher risk and higher potential return. They do not have guaranteed dividends, or always more voting rights, or liquidation priority.
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