Series 7 Exam Question 163: Answer and Explanation

Question: 163

Common stockholders of PXPX Corporation have which of the following rights and privileges?

• A. The right to receive an audited financial report weekly
• B. The right to vote for cash dividends to be paid
• C. A residual claim to assets at dissolution
• D. The right to vote for stock dividends to be paid

Correct Answer: C

Explanation:

C. Common stockholders of PXPX Corporation — or, for that matter, any publicly traded corporation — have a residual claim to the assets of the corporation at dissolution. PXPX Corp. common stockholders are entitled to receive a report containing audited financial statements on a yearly, not weekly, basis. Finally, PXPX Corp. stockholders never get to vote on dividends to be paid (whether stock or cash); dividends are decided by the board of directors.