Canadian Securities Course (CSC) Practice Exam · Question
Which of the following statements is true regarding common shareholders compared to preferred shareholders?
Common shareholders have a residual claim on assets during liquidation, meaning they are paid after all other creditors and preferred shareholders.
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Question: Which of the following statements is true regarding common shareholders compared to preferred shareholders?
Answer options:
- Common shareholders have priority over preferred shareholders for dividend payments.
- Preferred shareholders typically have voting rights, while common shareholders do not. ✅ Common shareholders have a residual claim on assets during liquidation.
- Preferred shares offer greater potential for capital appreciation than common shares.
Correct answer: Common shareholders have a residual claim on assets during liquidation.
Explanation: Common shareholders have a residual claim on assets during liquidation, meaning they are paid after all other creditors and preferred shareholders.
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