In the Context of Financial Securities, Identify a Similarity Between

question 28

Multiple Choice

In the context of financial securities, identify a similarity between stocks and bonds.

• A) Holders of both stocks and bonds are the creditors of a corporation.
• B) Holders of both stocks and bonds are legally entitled to receive a dividend.
• C) Like bonds, stocks are formal IOUs issued by corporations.
• D) Like stocks, the price of bonds can rise and fall.

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Definitions:

Dividend Payable

Liability showing amount of cash dividend owed.

Stock Split

Issuing of additional shares of stock to stockholders; total par or stated value remains the same.

Par Value

The face value of a bond or stock, representing the amount to be returned to the bondholder at maturity or the value assigned to a share of stock for accounting purposes.

Stock Split

A corporate action to increase the number of shares, reducing the price per share correspondingly without changing the market capitalization.