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ACC 423 Week 1 Discussion Question 1

ACC 423 Week 1 Discussion Question 1 - common stockholders...

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Due by Thursday day 3, week 1 DQ #1 What are some similarities and differences between common stock and preferred stock? As a shareholder, would you want preferred or common stock? Why? As a corporation, would you rather issue preferred or common stock? Why? Common stock and preferred stock have two major differences. The first difference is preferred stock offers shareholders with a greater claim to assets and earnings of the company. When a company is doing well, the company will give distributions to preferred shareholders before making distributions to common shareholders. The second difference is that the dividends paid to preferred stockholders are paid differently than those paid to common stockholders. Preferred stockholders are paid on a regular basis, whereas
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Unformatted text preview: common stockholders are paid only after the company’s board of directors has made a list of all stockholders and voted on the payments. As a shareholder, I would want to invest in preferred stock because there is less risk with preferred stock and preferred stock would allow me to receive a steady (or reliable) source of revenue. As a corporation, I would rather issue preffered stock because preferred stock would reduce the liability to the corporation. The corporation’s investors would also being more willing to invest in preffered stock because there would be less risk for them, which would generate more investors....
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