Response to the following questions:
1. a. Differentiate between common stock and preferred stock.
b. Describe briefly cumulative preferred stock.
2. A stockbroker advises a client to "buy cumulative preferred stock.... With that type of stock,... [you] will never have to worry about losing the dividends." Is the broker right?
3. What is the difference between the primary and secondary markets?
4. If common stock of $100 par is sold for $130, what is the $30 difference between the issue price and par called?