Financial Markets and Institutions
Financial Markets and Institutions
6th Edition
ISBN: 9780077641825
Author: SAUNDERS
Publisher: Mcgraw-Hill Course Content Delivery
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Chapter 8, Problem 1DYU
Summary Introduction

To determine: The meaning of common stock.

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Explanation of Solution

The common stock is a type of security that represents the holdings or ownership in a company. The common stockholders have the following rights and they exercise control as follows:

  • By electing the board of directors.
  • Voting on corporate policy

While considering the priority order on the basis of ownership, the common stock will be at the bottom. The common stockholders have the right on the company’s assets at the time of liquidation after settling bondholders, preferred shareholders and other debt holders.

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