________ is a type of equity security that represents the residual value of a corporation.

Question

Quizplus · Accepted Answer

Common stock represents ownership in a corporation and entitles shareholders to share in the company's profits and vote on important company decisions. It is considered a residual value security because in the event of liquidation or bankruptcy, common stockholders are entitled to a portion of the remaining assets after all debts and preferred stock dividends have been paid. Preferred stock, on the other hand, represents a higher priority claim on a company's assets and typically offers fixed dividends with less ownership rights than common stock. Cumulative and participating preferred stock have additional features, but they also represent a higher priority claim than common stock.

________ Is a Type of Equity Security That Represents the Residual