Section 3
Rules and Rights of Common and Preferred Stock
By Boundless
In the cases of bankruptcy and dividend distribution, preferred stock shareholders will receive assets before common stock shareholders.
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Common stock generally carries voting rights, while preferred stock does not; however, this will vary from company to company.
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Preferred shares have numerous rights which can be attached to them, such as cumulative dividends, convertibility, and participation.
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New shares can be purchased on exchanges and current shareholders will usually have preemptive rights to newly issued shares.
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Preferred stock can include rights such as preemption, convertibility, callability, and dividend and liquidation preference.
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Common stock, preferred stock, and debt are all securities that a company may offer; each of these securities carries different rights.