Which of the Following Statements Is True of Common Stockholders

question 24

Multiple Choice

Which of the following statements is true of common stockholders?

• A) They are legally entitled to annual dividends.
• B) They are prone to a significant degree of risk.
• C) Their average rate of return is lower than that of investors in other financial instruments.
• D) They are safe from incurring capital losses.

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Definitions:

Economic Profit

The difference between the total revenue earned by a business and the total costs (both explicit and implicit) of all resources used.

Market Price

The current market value at which transactions for a service or asset are conducted.

Units

Basic measures or quantities considered as a standard in terms of which other quantities can be expressed.

Economic Profit

Profit calculated by subtracting both explicit and implicit costs from total revenues, capturing the true profitability of a venture.