Products & Their RisksQuestion 8 of 398
An investor who buys common stock is exposed to which of the following characteristics?
a.A fixed maturity value paid at a set date
b.A guaranteed dividend regardless of company performance
c.Priority over bondholders in bankruptcy
d.Residual claim on earnings and assets and potential voting rights
Explanation
Common stock represents a residual (last-in-line) ownership claim on earnings and assets, and it typically carries voting rights. It has no maturity, no guaranteed dividend, and ranks behind bondholders in bankruptcy.
Practice all 398 questions free — no signup required.
Related questions on this topic
- An American Depositary Receipt (ADR) is best described as a security that:
- A company issues stock rights to existing shareholders. The rights primarily allow those shareholders to:
- How do warrants typically differ from stock rights when first issued?
- A convertible preferred stock is most valuable to a holder when:
- Treasury stock refers to shares that:
- A shareholder wants to maintain the same percentage ownership after a company issues new shares. Which right supports this goal?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review