Common Stock

What right does a common stockholder have?

• • The right to receive guaranteed dividends

• The right to elect the board of directors and vote on corporate policies

• The right to be paid before bondholders in the event of liquidation

• The right to fixed interest payments

Which of the following is true about common shareholders in the case of bankruptcy?

• They receive assets before bondholders

• They receive assets before creditors

• They receive assets after bondholders, creditors, and preferred shareholders

• They are paid first in any liquidation process

If Ali holds 10 shares of a company that has 100 shares trading in the market, what is the maximum amount he can lose if the company goes bankrupt?

• The total market value of all 100 shares.

• The value of his 10 shares.

• Nothing, because he has limited liability.

• The value of the company’s total assets.

What significant decisions can common stockholders influence through their voting rights?

• Daily operations of the company

• Selection of the board of directors and corporate policies

• The company's marketing strategy

• Employee hiring decisions

What benefit do pre-emptive rights provide to shareholders as a company grows?

• They allow shareholders to acquire shares at a lower price.

• They ensure shareholders can sell their shares at a profit.

• They give shareholders priority in receiving dividends.

• They enable shareholders to maintain a certain percentage of ownership.