Which of the following statements best describes the difference between common stock and preferred stock?

• A. Preferred stockholders have priority over common stockholders in claims on equity and dividends.
• B. Common stockholders have priority over preferred stockholders in receiving dividends.
• C. Preferred stockholders have voting rights, while common stockholders do not.
• D. Common stockholders receive fixed dividends, while preferred stockholders receive variable dividends.

Answer: (A)