Which of the Following Statements Is Correct

question 85

Multiple Choice

Which of the following statements is correct?

• A)A tracking, or target, stock is the same as the stock of an independent stand-alone company.
• B)If a company has dual-class shares, Class A and Class B, the shares may pay different dividends, but they must have the same voting rights.
• C)The preemptive right is a provision in the article of incorporation that gives common shareholders the right to purchase (on a pro rata basis) new issues of the firm's common stock.
• D)The stock valuation model, P₀ = D₁/(r_s - g), cannot be used for firms that have negative growth rates.

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Definitions:

Equity Method

The equity method is an accounting technique used by a company to record its investment in another company when it has significant influence but not full control, typically between 20% and 50% ownership.

Significantly Influenced

A condition where an investor has a considerable but not controlling interest in another company, able to affect its policies without direct control.

Non-Strategic Investments

Investments made without a long-term plan or alignment with the core goals of an investor or organization.

Short Or Long-Term

A classification that distinguishes between assets, liabilities, or goals based on the duration, typically under or over one year, respectively.