When comparing liquidity, ordinary shares are generally more liquid than preferred shares. Liquidity refers to how easily an asset can be bought or sold in the market without significantly affecting its price. Ordinary shares are typically traded in much higher volumes on major stock exchanges, which means there are more buyers and sellers available at any given time. This active participation results in tighter bid-ask spreads and faster execution of trades.

Preferred shares, on the other hand, tend to be less liquid. They are issued in smaller quantities and are often held by long-term, income-focused investors who prefer stable dividend payments over frequent trading. As a result, the trading volume of preferred shares is usually lower, which can lead to wider bid-ask spreads and slower transaction times. This makes it slightly more difficult for investors to enter or exit positions quickly at their desired price.

Another reason for the higher liquidity of ordinary shares is their appeal to a broader audience. Growth investors, day traders, and institutional investors actively trade ordinary shares due to their price volatility and potential for capital appreciation. In contrast, preferred shares behave more like fixed-income instruments, attracting a narrower group of investors.

In summary, ordinary shares are more liquid due to higher trading volume, broader market participation, and greater price movement, while preferred shares offer lower liquidity but more stable income characteristics.