Which of the Following Is a Difference Between Common Stock

question 52

Multiple Choice

Which of the following is a difference between common stock and bonds?

• A) Bondholders have a voice in management; common stockholders do not.
• B) Bondholders have a senior claim on assets and income relative to stockholders.
• C) Stocks have a stated maturity but bonds do not.
• D) Dividend paid to stockholders is tax-deductible but interest paid to bondholders are not.

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Definitions:

Adequate Cash Flow

The level of cash generation by a business that is sufficient to cover its operational expenses and financial obligations.

Business

The act of engaging in trade, commerce, or activities for profit and growth.

Cash-Flow Projections

Estimates of a company's future financial liquidity over a specific period, accounting for incoming and outgoing cash.

First Year

Pertains to the initial period of time, typically referring to the first 12 months, in various contexts such as a company's operations, an educational program, or an individual's experience in a new role.