Which One of the Following Statements Is True

question 1

Multiple Choice

Which one of the following statements is true?

• A) Equity securities offer fixed claims on future cash payouts.
• B) Unlike bondholders,for their returns,shareholders rely entirely on price appreciation.
• C) In theory,common shareholders exercise very little control over company decisions.
• D) Historically,common shareholders have earned a risk premium as compensation for risk borne in excess of government bonds.
• E) Preferred shareholders are the first investors to be repaid in bankruptcy liquidation.

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Definitions:

Privatize Losses

The practice of shifting financial losses from a private company to the public or government, typically through bailouts or subsidies.

Debt Crisis

A situation in which a country, organization, or individual cannot meet its financial obligations due to high levels of debt, leading to severe economic challenges.

Government Spending

The total amount of money expended by the government on various services, infrastructure, and public welfare.

Tax Revenues

The income gained by governments through taxation, which is used to fund public services and infrastructure.