(I)A share of common stock in a firm represents an ownership interest in that firm.
(II)A share of preferred stock is as much like a bond as it is like common stock.

Question

Quizplus · Accepted Answer

(I) is true, as common stock represents a fractional ownership in the company, entitling the holder to voting rights and a share in profits.
(II) is also true, because preferred stock has a fixed dividend rate like a bond, but unlike bonds, preferred stockholders do not have any voting rights.

(I)A Share of Common Stock in a Firm Represents an Ownership