Which of the Following Is Not True Regarding Common Stock

question 28

Multiple Choice

Which of the following is not true regarding common stock?

• A) Common stock has no maturity.
• B) New issues of common stock may dilute existing shareholder equity.
• C) Common stock is a permanent source of funds.
• D) Dividends paid are not tax-deductible.
• E) Dividends are considered a fixed charge that must be paid.

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Definitions:

Maximizing Profits

The process or strategy of adjusting operations, costs, and pricing to achieve the highest possible return or net income.

Division Revenues

The total amount of income generated by a specific division or section of a company through its operations and sales.

Parent Company

A company holding a sufficient amount of another firm's voting shares to influence or determine its board of directors, thereby controlling its management and operational decisions.

Incentives

Benefits or rewards offered to encourage specific actions or behaviors.