During periods of time when a corporations is earning large returns,the increased value of the firm accrues to

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Common stockholders are the owners of the company and are entitled to any profits made by the company. When the corporation earns large returns, the value of the company increases, which ultimately benefits the common stockholders as they will see an increase in the value of their shares. Bondholders receive fixed interest payments regardless of the company’s profits, and preferred stockholders have a fixed dividend rate that is paid out before common stock dividends, but they do not benefit from the same increase in value as common stockholders during profitable periods. Management may receive bonuses or stock-based compensation, but they do not directly benefit from the increased value of the firm.

During Periods of Time When a Corporations Is Earning Large