courses.aplia.com Attempts: Keep the Highest: /1 4. Types of common stock AaAa T
ID: 2780683 • Letter: C
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courses.aplia.com Attempts: Keep the Highest: /1 4. Types of common stock AaAa To segment the rights to which certain common shareholders are entitled, companies often separate common equity into more than one class of shares called common stock classes; the shares in these classes are referred to as classified stock Consider this case: When Google went public, it issued Class 8 shares that had 10 votes per share as compared to Class A shares that had 1 vote per share. Class B shares were sold to the founders, executives, and insiders in the company. Source: "Google 2004 Annual Report," on Google Investor Relations, http://investor.google.com/pd/2004 AnnuaiReport.pdf. Based on this example, which of the following statements is true? O Classified stock is not issued to give more votes per share to founders of the firm. O Classified stock is issued to give more votes per share to the founders of the firm.Explanation / Answer
Option B.
Classified stock is issued to give more votes per share.
Inorder to give special voting rights equity is separated into classified stock. Classified stock has special voting rights, called super-voting rights, where each share has more votes per share than the normal stocks.
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