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Quiz:Quiz 1

Multiple choice

Part 1Which of the following are differences between a bond and a common​ stock? ​(Select all that​ apply.) A. A corporation has to pay all stockholders before paying bondholders. B. A bond is a debt instrument that entitles the owner to receive periodic amounts of money until its maturity​ date, whereas a common stock represents a share of ownership of the institution that has issued the stock. C. A bond is a claim on the earnings and assets of a​ corporation, whereas a common stock promises to make periodic payments for a specified period of time. D. A corporation has to pay all bondholders before paying stockholders.

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Restating the question and options to ensure clarity: the task asks us to identify differences between a bond and a common stock and to select all that apply. The options present four statements labeled A to D. Option A: 'A corporation has to pay all stockholders before paying bondholders.' This is incorrect. In typical corporate capital structure, bondholders have a higher priority claim on assets and income than stockholders. Stockholders are residual claimants, meaning they are paid after debt obligations an......Login to view full explanation

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