Question

Which of the following is not a characteristic of corporate ownership?

Multiple Choice

A) Stockholders have no liability for the debts of the corporation.

B) Ownership interests are freely transferable.

C) Shares of stock can be purchased in small increments.

D) Corporate earnings are distributed as interest payments.

Answer 1

The correct answer is D) Corporate earnings are distributed as interest payments. Stockholders have no liability for the debts of the corporation, ownership interests are freely transferable, and shares of stock can be purchased in small increments. However, corporate earnings are not distributed as interest payments; they are distributed as dividends to stockholders.

Step-by-step explanation:

The correct answer is D) Corporate earnings are distributed as interest payments.

A characteristic of corporate ownership is that stockholders have no liability for the debts of the corporation (option A). Another characteristic is that ownership interests are freely transferable (option B), meaning shares of stock can be bought or sold easily. Additionally, shares of stock can be purchased in small increments (option C), allowing investors to buy as little or as much stock as they want.

However, corporate earnings are not distributed as interest payments (option D). Instead, corporate earnings are typically distributed as dividends to stockholders.