Which of the Following Is Not True of Common Stock

question 49

Multiple Choice

Which of the following is not true of common stock?

• A) Common stock represents partial ownership in the firm.
• B) Common stock is riskier than preferred stock.
• C) Investors in common stock are given voting rights.
• D) Investors in common stock are guaranteed a dividend.

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Definitions:

Influenza Epidemic

A widespread outbreak of influenza (flu) that affects a large proportion of the population in a particular region or country.

Flu Shot

is a vaccine administered to protect individuals against influenza viruses, recommended annually to combat the flu season.

Moral Hazard

A situation where one party takes excessive risks because another party bears the cost of those risks, often seen in insurance and finance.

Adverse Selection

A situation in finance and insurance where there is an asymmetric information problem causing bad risks to be more likely to be selected.