Companies can issue different classes of common stock.Which of the following statements concerning stock classes is CORRECT?
A) All common stocks fall into one of three classes: A,B,and C.
B) All common stocks,regardless of class,must have the same voting rights.
C) All firms have several classes of common stock.
D) All common stock,regardless of class,must pay the same dividend.
E) Some class or classes of common stock are entitled to more votes per share than other classes.

Question

Quizplus · Accepted Answer

Some companies issue different classes of common stock with varying voting rights. For example, Class A shares may have one vote per share, while Class B shares may have 10 votes per share. This allows company founders or insiders to maintain control over the company even if they hold a smaller percentage of the overall shares.

Companies Can Issue Different Classes of Common Stock