Question

Salma owns stocks of an e-commerce business. In exchange for the money she has invested, she has received two property rights from the business. Which of the following is most likely to be one of the property rights given to her?
A. She will get a share of the residual earnings of the business.
B. She will be the only owner of the assets of the business.
C. She will get ownership of the private properties owned by other investors of the business.
D. She will be entitled to a higher percentage of the profits earned by the business.

Answer 1

Answer:

A. She will get a share of the residual earnings of the business.

Explanation:

When someone buys a corporation's stock, they become co-owners of the corporation and acquire a fraction (or piece) of the corporation.

Stockholders like Salma, are entitled to voting rights (proportional to the amount of stocks owned), dividend distributions (own a fraction of the corporation's profits) and essentially own a piece of the corporation's wealth.