The correct answer is: A. intrinsic preference
Preferred stocks are a type of equity security that has a fixed dividend rate and, in most cases, a preference over common stock in the event of a liquidation. Preferred stocks are also known as preference shares or preferred equity.
Preferred stocks are classified as intrinsic preference because they have a fixed dividend rate that is paid out before any dividends are paid to common shareholders. This means that preferred shareholders have a higher claim on the company’s earnings than common shareholders.
Perpetuities are a type of security that has no maturity date and, therefore, pays dividends forever. Extrinsic preference is a type of preference that is not based on the company’s financial performance. Weak preference is a type of preference that is not as strong as other types of preference.
Here is a table that summarizes the key differences between preferred stocks and common stocks:
| Preference stock | Common stock |
| — | — |
| Has a fixed dividend rate | Does not have a fixed dividend rate |
| Has a preference over common stock in the event of a liquidation | Does not have a preference over common stock in the event of a liquidation |
| Is less risky than common stock | Is more risky than preferred stock |
| Is more liquid than common stock | Is less liquid than preferred stock |
I hope this helps! Let me know if you have any other questions.