If a corporation earns a profit, how do owners of the firm share in the profit?

Question

Quizplus · Accepted Answer

When a corporation earns a profit, it can distribute a portion of that profit to shareholders in the form of dividend payments on shares of the firm's stock. Therefore, owners of the firm share in the profit through dividends on the stock they own. A is incorrect because coupon payments on bonds are fixed and are not tied to the profitability of a corporation. C is incorrect because owners would only realize a capital gain if they sell their stocks or bonds at a higher price than they purchased them for. D is incorrect because raising the interest rate on bonds does not directly involve sharing profits with owners of the firm.

If a Corporation Earns a Profit, How Do Owners of the Firm