Question

Nguyen was trying to decide between purchasing the common stock shares of McAlister Manufacturing, or preferred shares of the same company. As a student of business, you provide the following accurate information that_________.
a. preferred shareholders typically do not have voting rights. Companies are obligated to pay preferred shareholders their dividends, before paying dividends to common stockholders.
b. preferred shares fluctuate in price, but owners of preferred shares are given voting right preferences, whereas common shareholders have no voting rights.
c. preferred shares and common stock shares are never offered by the same company.
d. common stock shares are not as risky as preferred shares. These are the only ones with voting rights and dividend payments.

Answer 1

Answer:  Option a

                                             

Explanation: In simple words, preferred shareholders refers to the holders of preference shares of an organisation. Unlike common stock, preferred stock are the securities on which the holders receives a fixed amount of payment but only if the occupancy have appropriate amount of profits to distribute.

Preference shareholders have the right to get paid before equity shareholders but after the debenture holders and their returns are usually higher than debt holders but smaller than equity holders.

Therefore, due to being less risky than equity holders these shareholders do not get any voting rights in the company as equity shareholders.