Question

Select the best answer for the question.

5. Who receives voting rights through equity financing?
A. Secondary stockholders
B. Common stockholders
C. Primary stockholders
D. Preferred stockholders

Answer 1

Common stockholders receive voting rights through equity financing. They elect the board of directors who make key company decisions. Option b is the answer.

Step-by-step explanation:

When it comes to equity financing, the group that receives voting rights are the common stockholders. These shareowners have the right to vote on corporate matters such as electing directors and making decisions that affect the company's future. It is the common stockholders who have a direct influence on the company through their voting rights, which is in contrast to preferred stockholders who typically do not have voting rights or have limited rights. The board of directors, elected by the shareholders, is responsible for major decisions such as issuing stock, payment of dividends, and reinvestment of profits.