Question

Common stockholders expect to be compensated for their investment via

1. dividend payments.

2. a capital gain when the investor sells the stock shares he or she owns.

3. interest payments.

4. A and B and C.

5. A and B.

The common stock of a corporation can be

1. privately owned by an individual.

2. closely owned by a small group of investors, such as a family.

3. publicly owned by a broad group of investors when traded on a

stock exchange.

4. A and B and C.

The _______________ right allows a corporation’s current common

shareholders to maintain their proportionate ownership in the firm

when the firm issues new shares of common stock.

1. preemptive

2. maintenance

3. absolute

4. non-negotiable

Preferred stock is often referred to as a __________________ security,

as preferred stock has characteristics of both common stock and bonds.

1. non-conforming

2. hybrid

3. disjointed

4. outmoded

Answer 1

1. Common stockholders expect to be compensated for their investment via

Option E. A and B Dividends and Capital gain.

2. The common stock of a corporation can be

Option A and B and C

A. privately owned by an individual.

B. closely owned by a small group of investors, such as a family.

C. Publicly owned by a broad group of investors when traded on a stock exchange

3. Option A Preemptive Right allows a corporation’s current common shareholders to maintain their proportionate ownership in the firm when the firm issues new shares of common stock

4. Option B hybrid Preferred stock is often referred to as a Hybrid security, as preferred stock has characteristics of both common stock and bonds