Respuesta :
Answer:
Option: C is true (Common Stock)
Step-by-step explanation:
Common stock is a form of corporate equity ownership, a type of security. They are known as Equity shares or Ordinary shares in the UK and other Commonwealth realms. This type of share gives the stockholder the right to share in the profits of the company, and to vote on matters of corporate policy and the composition of the members of the board of directors.
Hence, Common Stock are the stock which receives an equal part of the profits on each share to be distributed after all other obligations of a company have been satisfied.
Option C is correct. The common stock receives an equal part of the profits on each share to be distributed after all other obligations of a company have been satisfied.
Further explanation:
Profit distribution:
First, the company pays interest on the loan taken. After the payment of the loan, the company pays the preference dividend to the preferred stockholder. After the payment of all the outside liabilities, the remaining profit is distributed among the common stockholders. Therefore, the common stock has the highest risk and the amount of dividend depends on the remaining profit and the company’s policies.
Justification for the correct and incorrect options:
A.
Cumulative preferred: This is an incorrect option because the preferred stock receives the profit after the bondholders and before the common stock.
B.
No-par: This is an incorrect option because the no-par receives dividends before the common stock.
C.
Common: This is the correct option. The common stock is paid after the payment of all outside liabilities.
D.
Preferred: This is an incorrect option because the preferred stock receives the profit after the bondholders and before the common stock.
Thus, option C is correct. The common stock receives an equal part of the profits on each share to be distributed after all other obligations of a company have been satisfied.
Learn more:
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Answer details
Grade: Senior School
Subject: Economics
Chapter: National income
Keywords: type, stock, receives, equal, part, profits, each, share, distributed, after, all, other, obligations, company, have been satisfied, cumulative preferred, No-par, common, preferred
