Define common stock and preferred stock. How does common stock earn a return (2 ways)? How does preferred stock earn a return (one way)? Which one has a preference over the other in case of a bankruptcy and when dividends are declared by the board of directors? Describer which of the two securities have the highest earnings potential and why? Which of the two securities (common stock and preferred stock) command a higher required rate of return and why? What is the relationship between required rate of return (interest rates) and stocks values? What is the relationship between dividends and stock values