If you wish to have a direct voice in the running of a company, you should purchase

Question

BlackTom AI · Accepted Answer

Consider the scenario: you want a direct voice in how the company is run. 
Option A: bonds. Bonds are debt instruments that represent a loan to the company; bondholders receive interest and the principal back at maturity, but they typically do not have voting rights or a say in corporate governance. Therefore, buying bonds does not grant you influence over management decisions. 
Option B: common stock. Common stock represents ownership in a company. Holders typically have voting rights at shareholder meetings, allowing them to influence corporate policy, elect directors, and participate in major governance decisions. This aligns with the desire for direct voice in the running of the company. 
To assess the statement about purchasing to gain influence, recognize that ownership stakes are the primary way investors obtain governance voice. 
Additional context: while preferred stock can have other preferences (like dividends) it usually does not provide voting rights, or provides limited rights, depending on the issue. Hence it does not offer the same broad governance influence as common stock. 
In summary, debt instruments (bonds) provide creditor rights and fixed payments but not governance rights, whereas equity instruments (common stock) provide ownership and voting influence in governance decisions.

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If you wish to have a direct voice in the running of a company, you should purchase

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BUSFIN 1200 AU2025 (2014) Final Exam- Requires Respondus LockDown Browser

If you wish to have a direct voice in the running of a company, you should purchase

View Explanation

Log in for full answers

Similar Questions

If you believe that a firm will grow rapidly in the future, you should buy its

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Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

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