Companies can issue different classes of common stock. Which of the following statements concerning stock classes is most correct?
A) All common stocks fall into one of three classes: A, B, and C.
B) Most firms have several classes of common stock outstanding.
C) All common stock, regardless of class, must have voting rights.
D) All common stock, regardless of class, must have the same dividend privileges.
E) None of the statements above is necessarily true.

Question

Quizplus · Accepted Answer

There is no standard classification for common stock, and companies are free to create their own classes and classify them in any way they see fit. Some classes of common stock may have different voting rights, dividend privileges, or other benefits, while others may be identical to the company's other common stock. There is no requirement for all common stock to fall into specific classes or have the same voting or dividend rights.

Companies Can Issue Different Classes of Common Stock