SIE practice questioneasyCommon Stock
Which of the following is true regarding ownership rights of common stockholders?
- AThey have no voting rights.
- BThey have a fixed dividend rate.
- CThey have residual claim on assets after creditors and preferred shareholders.✓ Correct answer
- DThey are paid before bondholders in liquidation.
Explanation
Why C — They have residual claim on assets after creditors and preferred shareholders.
Common stockholders have a residual claim on assets after creditors and preferred shareholders are paid. They typically have voting rights, do not receive a fixed dividend, and are paid after bondholders in liquidation.
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