Detailed Answer
(b) A corporation by law may issue one or more classes
of common stock. This is also true for preferred stock. Answer
(a) is incorrect because a corporation is not required to issue
preferred stock. Answer (c) is incorrect because it is at the discretion
of the board of directors to declare a dividend. They may
wish to keep the earnings in the corporation for expansion purposes,
etc. Answer (d) is incorrect because if it issues preferred
stock, it may be either cumulative preferred stock or noncumulative
preferred stock.
