The rights of common stockholders typically include which of the following?

• A. The right to set company management salaries
• B. The right to vote at shareholder meetings
• C. The right to be repaid before creditors in case of liquidation
• D. The right to receive a fixed dividend each year

Answer: (B)

Verified step by step guidance

1. Understand the concept of common stockholder rights: Common stockholders are individuals or entities that own shares of a company's common stock. Their rights are typically outlined in the company's charter and are governed by corporate laws.
2. Identify the key rights of common stockholders: Common stockholders generally have the right to vote at shareholder meetings, the right to receive dividends (if declared by the company), and the right to share in the company's assets upon liquidation after creditors and preferred stockholders are paid.
3. Clarify the voting rights: Common stockholders have the right to vote on important matters such as electing the board of directors, approving mergers, or other significant corporate decisions. This is a fundamental right associated with owning common stock.
4. Address the liquidation priority: In the event of liquidation, common stockholders are paid after creditors and preferred stockholders. They do not have the right to be repaid before creditors, as creditors have a higher claim on the company's assets.
5. Explain dividend entitlement: Common stockholders do not have the right to receive a fixed dividend each year. Dividends are typically variable and depend on the company's profitability and the board of directors' decision to declare them.