Which term describes a type of stock that typically has priority for dividends but usually lacks voting rights?

Which term describes a type of stock that typically has priority for dividends but usually lacks voting rights?

• A. Common Stock
• B. Open-End Fund
• C. Preferred Stock
• D. Overdraft Protection

Answer: (C)

The concept at work is how different stock types balance money you receive as a shareholder with control over company decisions. Preferred stock is designed to provide a steadier income: it typically has priority to dividends, meaning these shareholders get paid before common stockholders. It often comes with a fixed dividend rate, which makes it appealing for investors seeking reliable income. However, that reliability usually comes with giving up voting rights, so holders don’t have a say in corporate governance through voting. Common stock, by contrast, usually carries voting rights and has dividends that can vary with the company’s performance, which means income isn’t as predictable. An Open-End Fund is a mutual fund, not a stock, and overdraft protection is a banking service, not an equity security. So the term that matches the description is preferred stock.

The concept at work is how different stock types balance money you receive as a shareholder with control over company decisions. Preferred stock is designed to provide a steadier income: it typically has priority to dividends, meaning these shareholders get paid before common stockholders. It often comes with a fixed dividend rate, which makes it appealing for investors seeking reliable income. However, that reliability usually comes with giving up voting rights, so holders don’t have a say in corporate governance through voting. Common stock, by contrast, usually carries voting rights and has dividends that can vary with the company’s performance, which means income isn’t as predictable. An Open-End Fund is a mutual fund, not a stock, and overdraft protection is a banking service, not an equity security. So the term that matches the description is preferred stock.