[overbet]

Hi everyone, I am new to the forum. I am an active trader (too active sometimes) and I have a question that I hope someone knowledgeable on this forum can answer. I have searched and searched for an answer but have yet to find a satisfactory one. I arbitrage the spread between common and preferred stocks, such as: NWS & NWSA, RIO & RIOPR and more recently in the news PBR & PBRA. My question is this, Why is there such a price difference between the common and preferred shares of companies? I understand if there is an obvious difference such as voting rights or dividends, however as an example, I have read the prospectus for RIO and cant find any difference that would constitute that big of a difference in share price. I also read somewhere that because one has options available and the other does not could be the reason, but this doesnt seem right to me either. I am concerned because it is uncomfortable for me to be short the less expensive stock in fear that I may lose the spread. If anbody has any input, Thx in advance.