Which one of the following statements related to common stock is correct?
A) Corporations are required to pay annual dividends to its common stockholders.
B) Corporations have the right to discontinue paying dividends.
C) Corporations pay dividends at the discretion of the firm's president.
D) Common stock is a form of corporate debt.
E) Common stock has a pre-defined liquidation value.

Question

Quizplus · Accepted Answer

Corporations have the right to discontinue paying dividends to its common stockholders. Dividends are not guaranteed and are paid at the discretion of the corporation's board of directors. A corporation may choose to use its profits in other ways, such as reinvesting in the business or paying off debt, rather than paying dividends to its shareholders.

Which One of the Following Statements Related to Common Stock