Which of the following statements is true about common stock? Common stock is co
ID: 2800153 • Letter: W
Question
Which of the following statements is true about common stock?
Common stock is considered to have a fixed maturity.
Owners of common stock are guaranteed dividend payment by the firm.
Owners of common stock have the lowest-priority claim on the firm’s cash flows.
Common stock holders have unlimited liability for the obligations of the corporation.
Common stock is considered to have a fixed maturity.
Owners of common stock are guaranteed dividend payment by the firm.
Owners of common stock have the lowest-priority claim on the firm’s cash flows.
Common stock holders have unlimited liability for the obligations of the corporation.
Explanation / Answer
Answer is Owners of common stock have the lowest-priority claim on the firm’s cash flows.
Common stocks are perpetual and are therefore does not have a fixed maturity.
Owners of common stock does not have a guranteed dividend payment.
Common stock holders have limited liability upto paid up value of shares and are therefore does not have unlimited liability for the obligations of the corporation.
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