Question

Common stockholders of a business enterprise are said to be the residual owners. The term residual owner means that shareholders _________.

a. are entitled to a dividend every year in which the business earns a profit.
b. have the rights to specific assets of the business.
c. bear the ultimate risks and uncertainties and receive the benefits of enterprise
ownership.
d. can negotiate individual contracts on behalf of the enterprise

Answer 1

C. Bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership

Step-by-step explanation:

The common stockholders in a business has the lowest priority and only tend to receive distribution of prior claims have been paid. This is why they are referred to as residual owners.

Preferred Stock is seen as a liability rather than part of an equity for residual owners.