1. Which of the following statements is true about common stock?
Common stock is considered to have a fixed maturity.
Owners of common stock are guaranteed dividend payment by the firm.
Owners of common stock have the lowest-priority claim on the firm’s cash flows.
Common stock holders have unlimited liability for the obligations of the corporation.
2. Which of the following statements is FALSE?
Depreciation is not a cash expense paid by the firm.
Depreciation expenses have a positive impact on free cash flow.
Depreciation expenses have a negative impact on free cash flow.
Firms often report a different depreciation expense for accounting and for tax purposes.