Companies Can Issue Different Classes of Common Stock

question 23

Multiple Choice

Companies can issue different classes of common stock.Which of the following statements concerning stock classes is CORRECT?

• A) All common stocks fall into one of three classes: A,B,and C.
• B) All common stocks,regardless of class,must have the same voting rights.
• C) All firms have several classes of common stock.
• D) All common stock,regardless of class,must pay the same dividend.
• E) Some class or classes of common stock are entitled to more votes per share than other classes.

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Definitions:

Agency Agreement

A contract in which one party (the agent) agrees to act on behalf of another party (the principal) in particular transactions.

Binding

Refers to an agreement or contract that is legally enforceable by law.

Independent Agent

An individual or entity that operates independently from the parties they contract with, often acting on behalf of another in a business transaction.

Contract of Agency

A legal agreement where one party, the agent, is authorized to act on behalf of another, the principal, in business transactions.