Which of the following is an example of common stock?

Study Economics and Personal Finance Exam. Use flashcards and multiple choice questions with hints and explanations. Prepare confidently for your test!

Ownership shares in a corporation are indeed an example of common stock. Common stock represents an ownership stake in a company, allowing shareholders to participate in the company's profits through dividends and potential appreciation in share value. When an individual purchases common stock, they become a part-owner of the corporation and may have voting rights in corporate decisions, reflecting their stake in the company's success.

On the other hand, the other options presented do not represent common stock. Securities that guarantee dividends typically refer to preferred stock or fixed-income securities, which have different characteristics from common stock. Government bonds are debt instruments issued by the government, representing a loan made by the investor to the government rather than ownership in a corporation. Real estate investment trusts (REITs) are companies that own, operate, or finance income-producing real estate, and they can issue both common and preferred shares, but they themselves are not a form of common stock. Thus, the selection of ownership shares in a corporation as common stock is accurate, highlighting the importance of distinguishing between various types of financial instruments.

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