Holders of common shares receive certain benefits,such as a residual claim,which:
A)is the right of shareholders to be paid back their investment before anyone else if the company ceases operation.
B)is the right to oversee management of the company.
C)is the right to share in any remaining assets after creditors have been paid off if the company is liquidated.
D)is the continuing right to receive a share of profits as dividends.

Question

Quizplus · Accepted Answer

A residual claim refers to the right of common shareholders to receive any remaining assets after creditors and preferred shareholders have been paid off in the event of a company liquidation. This means that common shareholders only receive their share of any remaining assets after all prior claims have been satisfied.

Holders of Common Shares Receive Certain Benefits,such as a Residual