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A class of ownership that has a higher claim on assets and earnings than common stock holders is known as:
1. Hybrid stock holders
2. Debenture share holders
3. Preferred stock holders
4. Commodity holders

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Correct Answer - Option 3 : Preferred stock holders

Preferred Stock Holders:

  • The term "stock" refers to ownership or equity in a firm.
  • Common stock and preferred stock are two types of equity.
  • Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders.
  • The details of each preferred stock depend on the issue.
  • Preferred stockholders have a higher claim on distributions (e.g. dividends) than common stockholders.
  • Preferred stockholders usually have no or limited, voting rights in corporate governance.
  • In the event of a liquidation, preferred stockholders' claim on assets is greater than common stockholders but less than bondholders.
  • Preferred stock has characteristics of both bonds and common stock which enhances its appeal to certain investors.

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