different between common stock and preference stock

A preferred stock, or preference stock, is a share of stock carrying additional rights above and beyond those coferred by common stock.

Differences of preference stock to common stocks are:

1. Preference in dividends: Before a dividend can be declared on the common stock, any dividend obligation to the preferred shares must be satisfied

2. Claim on liquidition: Preferred sotck has a claim on liquidation proceeds of a stock corporation, equivalent to its par or liquidation value. This claim is senior to that of common stock, which has only a residual claim.

3. Voting rights: Some preference stock have special voting rights to approve certain extraordinary events (such as the issuance of new shares or the approval of the acquisition of the company) or to elect directors, but most preference stock provide no voting rights associated with them. Some preference stock only gain voting rights when the preferred dividends are in arrears.

4. Almost all preference stock have a fixed dividend amount. The dividend is usually specified as a percentage of the par value or as a fixed amount. Unlike debt securities, however, a company is not legally required to pay preferred dividends and will not be in default for missing a preferred dividend payment.

5. Protective provisions: usually preference stock contain protective provisions which prevent the issuance of new preferred shares with a senior claim. Individual series of preferred shares may have a senior, pari-passu or junior relationship with other stock series issued by the same corporation.

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普通股(Common stock)是指在公司的經營管理和盈利及財產的分配上享有普通權利的股份，代表滿足所有債權償付要求及在優先股東的收益權與求償權要求後對企業盈利和剩餘財產的索取權，它構成公司資本的基礎，是股票的一種基本形式，也是發行量最大，最為重要的股票。

優先股是公司在籌集資金時，給予投資者某些優先權的股票，這種優先權主要表現在兩個方面：

１優先股有固定的股息，唔會隨公司業績好壞而波動，並可以先於普通股股東領取股息；

２當公司破產進行財產清算時，優先股股東對公司剩餘財產有先於普通股股東的要求權。但優先股一般唔參加公司的紅利分配，持股人亦冇表決權，不能借助表決權參加公司的經營管理。所以，優先股與普通股相比較，雖然收益和決策參與權有限，但風險亦較小。