Question

Companies can issue different classes of common stock. Which of the following statements concerning stock classes is CORRECT?a. All common stocks, regardless of class, must have the same voting rights.b. All firms have several classes of common stock.c. All common stock, regardless of class, must pay the same dividend.d. Some class or classes of common stock are entitled to more votes per share than other classes.e. All common stocks fall into one of three classes: A, B, and C.

Answer 1

Answer:

The correct answer is letter "D": Some class or classes of common stock are entitled to more votes per share than other classes.

Explanation:

The class of stock shares provides certain privileges such as voting rights, payment of dividends, and some other benefits or drawbacks. In that sense, we talk about preferred shares and common shares of a given company. Preferred stocks usually come along with dividends but do not include voting rights, while common stocks may include both dividends and voting privileges. Though, it does not mean that all common stocks of the same company have the same weight in right-to-vote terms. There may be differences among them as well.