Mark was trying to decide between purchasing the common stock shares of AMEREN-U

Question

Mark was trying to decide between purchasing the common stock shares of AMEREN-UE stock (a utility company), or preferred shares of the same company. As a student of business, you provide the following accurate information that ___________.

Select one:

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

Explanation / Answer

Answer A. is Correct.

Generally preference shareholders not entitled to voting rights. In case of Dividend payments they have preference over common shareholders

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