Chapter 18 discusses common and preferred stock. It is important to discuss the difference. Preferred stock is a special class of shares that possesses certain preferences or features not possessed by the common stock. The following features are those most often associated with preferred stock issues.

1. Preference as to dividends.

2. Preference as to assets in the event of liquidation.

3. Convertible into common stock.

4. Callable at the option of the corporation.

5. Nonvoting.