A Corporation May Be Authorized to Issue Both Common and Preferred

question 108

True/False

A corporation may be authorized to issue both common and preferred stock.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company’s earnings.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or under-valued.

Market Price

The current price at which an asset or service can be bought or sold, determined by demand and supply forces in the market.

Net Income

Net income is the profit a company has after all expenses, taxes, and costs have been deducted from total revenue, indicating the company's financial health.