Identify the differences between preferred stock and common stock.

Identification should include a differentiation that focuses on:

• Preferred stock guarantees regular dividend payments for a specified time and is therefore less risky.
• Common stock does not guarantee regular dividend payments.
• Preferred stockholders are entitled to assets of a liquidated business before holders of common stock.
• Common stockholders have a vote in the operation of the corporation, while holders of preferred stock do not.