Which of the following statements is true?

Question

BlackTom AI · Accepted Answer

Begin by restating the question in my own words to frame the analysis: we are asked which statement among the four is true.
Option 1: 'Transfer of ownership is much easier when a business is established as a corporation.' This aligns with common corporate structure advantages, because transferring shares typically involves simply recording a share transfer rather than re-titling assets or negotiating new ownership terms. In many jurisdictions, the transfer of corporate ownership is facilitated by share certificates and a transfer ledger, making it relatively straightforward compared to sole proprietorships or partnerships where dissolving and reassigning interest can be more cumbersome. The statement is plausible and consistent with standard corporate practice.
Option 2: 'Common shares have a dividend rate fixed by the share contract.' This is generally false because common shares often carry dividends that are not fixed; they are typically determined at the discretion of the board and can vary or be omitted depending on profits and other financial considerations. A fixed dividend rate is more characteristic of preferred shares or certain debt instruments, not common stock.
Option 3: 'All public corporations pay a dividend.' This claim is incorrect. Public corporations may pay dividends, but many do not, choosing to reinvest earnings back into the business or preserve capital. Dividend payments are contingent on profits, cash flow, and strategic decisions, so the blanket statement is inaccurate.
Option 4: 'As preferred shares have a volatile market value, they are a riskier investment than common shares.' In reality, preferred shares typically have more stable and predictable dividend payments and a higher claim on assets than common shares, which often makes them less volatile in price comparison to common shares in certain market conditions. Therefore this statement oversimplifies and can be misleading about risk profiles, and is not universally true.
Overall, evaluating the claims, the first option is consistent with how corporate ownership transfers function, whereas the other options rely on common misconceptions about dividends, public company practices, and risk characteristics of preferred versus common shares.

COMM_V 320 DD4 2025W1 Part A Final Exam December 15, 2025 Part A Multiple Choice - 30 minutes

Which of the following statements is true?

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