Which of the Following Statements Is Most Correct

question 22

Multiple Choice

Which of the following statements is most correct?

• A) If a company has two classes of common stock, Class A and Class B, the stocks may pay different dividends, but the two classes must have the same voting rights.
• B) An IPO occurs whenever a company buys back its stock on the open market.
• C) The preemptive right is a provision in the corporate charter which gives common stockholders the right to purchase (on a pro rata basis) new issues of common stock.
• D) Statements a and b are correct.
• E) Statements a and c are correct.

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Definitions:

Fundamental Analysis

An approach to evaluating a security that involves analyzing economic, financial, and other qualitative and quantitative factors.

Inventory Valuation Methods

Different approaches (such as FIFO, LIFO, and weighted average cost) used to assess the cost of goods sold and ending inventory value.

Common Size Income Statements

Financial statements that present all line items as a percentage of a base figure, facilitating comparison across different-sized companies.

FIFO vs. LIFO

Refers to the accounting methods for inventory management; FIFO stands for First-In, First-Out, indicating that the oldest inventory items are recorded as sold first, whereas LIFO stands for Last-In, First-Out, where the most recently produced or acquired items are the first to be expensed.