Which feature of common stock ownership allows a stockholder to share in the company's earnings after the creditors are paid?

Question

Quizplus · Accepted Answer

The feature of common stock ownership that allows a stockholder to share in the company's earnings after the creditors are paid is called a claim on income. As owners of the company, common stockholders have the ability to receive a portion of the profits in the form of dividends. However, this is only after the company has paid its debts and other obligations first, such as interest payments to bondholders or paying back loans to banks. Therefore, the claim on income is an important feature of common stock ownership and is one of the primary reasons investors may choose to purchase stocks in a company.

Which Feature of Common Stock Ownership Allows a Stockholder to Share