Which of the Following Is NOT True About Common Stockholders

question 46

Multiple Choice

Which of the following is NOT true about common stockholders and preferred stockholders?

• A) Preferred stockholders receive a fixed dividend each year.
• B) Common stockholders vote to elect the members of the board of directors.
• C) Preferred stockholders have a more senior claim on the firm's assets in the event of bankruptcy.
• D) Preferred stockholders are considered the firm's ultimate owners.

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Definitions:

Fair Value

The income from offloading an asset or the charge for transferring a liability in a methodical exchange among participants in the market at the time of determining its value.

Orderly Transaction

A transaction executed in an organized manner where both buyer and seller have access to all pertinent information and neither is under undue pressure.

Form 10-K

An annual report required by the U.S. Securities and Exchange Commission that gives a comprehensive summary of a company's performance.

Value-Relevance

The usefulness of financial information in affecting investors' decisions, including how changes in financial statement measures (like earnings and book values) impact stock market values.