Final answer:
Common stock has defining features like residual claim on cash flows, residual claim on assets, voting rights, preemptive rights, limited liability, but it does not offer a fixed return. Therefore correct option is F
Step-by-step explanation:
A common stock represents ownership in a corporation and is considered one of the main types of capital stock.
The defining features of common stock include residual claim on cash flows, where common stockholders are entitled to a share of the company's profits after all other obligations are paid.
Common stockholders also have a residual claim on assets, which means they have the right to a portion of the company's assets if it is liquidated.
Additionally, common stockholders typically have voting rights in corporate matters, such as electing the board of directors or approving mergers and acquisitions.
Preemptive rights refer to the right of common stockholders to maintain their percentage ownership in the company by purchasing additional shares before they are offered to the public.
Limited liability is another defining feature of common stock, which means that shareholders are not personally liable for the company's debts beyond their investment.
A fixed return is not a defining feature of common stock. Unlike bonds or preferred stock, common stock does not offer a predetermined fixed return. Instead, the return on investment for common stockholders is dependent on the company's performance and profitability.