Is common stock riskier than preferred stock?
Absolutely. Common stock yields higher returns than almost every other investment over the long-term horizon. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders, and preferred shareholders are paid.
Related Questions
- How will I be able to reconcile my former class A preferred stock account balance to my new common stock and/or ESPP account balance after the reclassification?
- How are repeated conversions of preferred stock prevented from diluting the value of common stock?
- Is common stock riskier than preferred stock?
