When Comparing Common Stock of the Same Company, It Is

question 45

Multiple Choice

When comparing common stock of the same company, it is fair to say that

• A) all shares, no matter how many classes, are all created with the same equal rights.
• B) companies sometimes have two different classes of shares with unequal rights to dividends and votes.
• C) the Securities and Exchange Commission allows only one class of common stock.
• D) investors are indifferent between class A and class B shares.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities.

Articles of Incorporation

Legal documents filed with a government body to legally document the creation of a corporation.

Par Value

The nominal or face value assigned to a share of stock or a bond by the corporation issuing it, important in legal and accounting contexts but not necessarily related to market value.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, making them more affordable to small investors.