Which of the following is true of common stock ?
A) It is often considered quasi-debt due to fixed payment obligation.
B) It has less restrictive covenants than debt.
C) It gives the holder voting rights which permit selection of the firm's directors.
D) Its holders have priority over preferred stockholders in the event of liquidation of assets.

Question

Quizplus · Accepted Answer

Common stock gives the holder voting rights which permit selection of the firm's directors. A is incorrect because common stock does not have a fixed payment obligation like debt. B is incorrect because common stock typically has more restrictive covenants than debt. D is incorrect because preferred stockholders have priority over common stockholders in the event of liquidation of assets.

Which of the Following Is True of Common Stock