Which of the Following Is True of a Common Stock

question 112

Multiple Choice

Which of the following is true of a common stock?

• A) It gives voting rights which permit determination of the amount of dividend receivable.
• B) It gives claims on income and assets which are superior to the claims of creditors of the firm.
• C) Dividends on common stock are fully tax-deductible.
• D) There is no fixed dividend payment obligation for the company.

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Definitions:

Maximum Utility

The highest level of satisfaction or benefit that a consumer can obtain from the consumption of goods and services within the constraints of their income and prices.

Consumer Income

The total amount of money earned by individuals or households that can be used for saving, spending, or investing.

MU y/ Pᵧ

MU y/ Pᵧ represents the marginal utility of good "y" divided by its price, a concept in economics used to analyze consumer choice, indicating the additional satisfaction per unit of currency spent on that good.

Maximize Utility

The economic principle of selecting the option that yields the highest satisfaction or benefit.