Question of the Week

Which statements about common shareholder rights are FALSE?
I. A shareholder may exchange shares to convertible bonds at his option.
II. A shareholder’s right to a dividend precedes a bondholder’s right to a coupon payment.
III. A shareholder may inspect a company’s books.
IV. A shareholder may transfer ownership to minor children.

A) I, II and IV
B) II and III
C) II, III and IV
D) I, II, III and IV


Answer:

The correct answer is a.

I should be the the other way around: convertible bond holders can exchange their bonds for shares.
II is incorrect because bondholders precede shareholders.
IV. is incorrect because Shareholders have the right of transfer, but minor children cannot hold securities.