Multiple Choice
Which of the following is NOT true of a corporation?
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12. Stockholders' Equity
Characteristics of a Corporation
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Which of the following is a right typically held by common stockholders of a corporation?
A
The right to vote in the election of the board of directors
B
The right to receive a fixed dividend each year
C
The right to approve management salaries
D
The right to receive interest payments on their investment
Verified step by step guidance1
Understand the concept of common stockholders: Common stockholders are individuals or entities that own shares of a corporation's common stock. They have certain rights associated with their ownership.
Identify the typical rights of common stockholders: Common stockholders generally have the right to vote on corporate matters, such as electing the board of directors, and to share in the company's profits through dividends (if declared).
Clarify the voting rights: Common stockholders typically have the right to vote in the election of the board of directors. This is a key feature of common stock ownership and allows them to influence corporate governance.
Distinguish between fixed dividends and common stock dividends: Common stockholders do not receive fixed dividends each year. Fixed dividends are typically associated with preferred stockholders, not common stockholders.
Explain the exclusion of other options: Common stockholders do not have the right to approve management salaries or receive interest payments on their investment. These are not rights associated with common stock ownership.
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