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.