Which of the following is not a characteristic of common stock?
A) Shares can be sold for a capital gain if the price of the stock increases.
B) The firm has no legal obligation to pay dividends to stockholders.
C) An increase or decrease in the market value of the stock will have a corresponding effect on the value of the investment.
D) Each share of stock represents debt for the corporation.
E) Cash dividends are generally paid on a quarterly basis.

Question

Quizplus · Accepted Answer

Common stock represents equity ownership in a corporation, not debt. Therefore, each share of common stock does not represent debt for the corporation.

Which of the Following Is Not a Characteristic of Common