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preference share holders get some preferences over common stock holders. preference share holders get a fixed percentage of return as dividend, common stock holders get dividend only after distributing the dues for preference share holders. common share is more risky at the same time we can expect more return. preference share is less risk and less return
Preferred stock considered external financing ,and the holders of preferred stock have no right to attend the board meeting to vote, in case of bankruptcy the holders of preferred stock have the right to get their money before the common stock ,and they get a fixed percentage of return dividends .
The holders of common stock have the right to attend the board of directors meeting to vote they are owners in the company ,and they get dividends from the company cash or stock .
The common stock is riskier than preferred stock .
