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:

Proportional Tax

A tax system where the rate remains constant regardless of the amount to which the tax base is applied.

Progressive Tax

A taxation system where the tax rate increases as the taxable amount or income increases, placing a higher burden on wealthier individuals.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases, placing a higher relative burden on lower-income earners.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable. This can happen due to factors like market inefficiencies, taxes, or subsidies.