The Purpose of Nonvoting Common Stock Is to ________

question 128

Multiple Choice

The purpose of nonvoting common stock is to ________.

• A) limit the voting power of the management
• B) allow the minority interest to elect one director
• C) raise capital without giving up any voting control
• D) give preference on distribution of earnings to those shareholders who own the stock

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Definitions:

Corporate Form

A legal structure of organization designated to conduct business, which can limit the liability of shareholders and associates with various tax rules.

Taxes

Mandatory financial charges imposed by governments on individuals, corporations, and transactions.

Secondary Market

A marketplace where investors buy and sell securities they already own, which were previously issued in the primary market.

Common Shares

Common Shares represent ownership interests in a corporation, granting holders voting rights and a share in the company's profits through dividends and capital appreciation.