Types of common stock In some cases, individuals who start a business have speci
ID: 2743504 • Letter: T
Question
Types of common stock In some cases, individuals who start a business have special voting rights that help them exercise more control over the firm. They own a special class of stock called founders shares. Consider this case: When Google went public, it issued Class B shares that had 10 votes per share as compared to Class A shares that had 1 vote per share. Class B shares were sold to the founders, executives, and insiders in the company. Based on this example, which of the following statements is true? Classified stock is issued to give more votes per share to the founders of the firm. Classified stock is not issued to give more votes per share to founders of the firm.Explanation / Answer
The stock which has many classes, like class-A, class-B, etc, differentiating preferences or voting rights is called classified stock.
The first statement is true here.
There are two classes of shares --- class A and class B. Class B has more voting powers than class A and these shares are issued to the founders of the firm.
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