Which of the following is true?
A) Most stockholders own stock because they want to run the business.
B) The shareholders of a large well-established firm can be reasonably sure that they will earn a real rate of return of about 7 percent in the future.
C) Ownership of a corporate bond provides the bondholder with an ownership right to a fraction of the firm's future profits.
D) Stock ownership makes it possible for investors to own a fractional share of a firm's future profits even if they do not participate in the operation of the firm.

Question

Quizplus · Accepted Answer

Stock ownership, unlike bond ownership, provides the investor with ownership rights to a fraction of the firm's future profits. This is true even if the investor does not participate in the operation of the firm. Therefore, option D is the correct answer. Option A is incorrect as most stockholders own stock to earn a return on their investment, not to run the business. Option B is not necessarily true as the rate of return can vary based on various factors. Option C is incorrect as bondholders have no ownership rights to the firm's future profits.

Which of the Following Is True