The right to share in earnings means that common stockholders must be paid a dividend whenever preferred dividends or bond interest is paid.

Question

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The right to share in earnings means that common stockholders may receive a dividend, but it is not a requirement. The board of directors determines whether or not to issue a dividend, and the amount of the dividend is not necessarily tied to preferred dividends or bond interest payments.

The Right to Share in Earnings Means That Common Stockholders