Answer: a claim on the company's net assets in the event of liquidation.

## Explanation **Correct Answer: C** - a claim on the company's net assets in the event of liquidation. **Detailed Explanation:** Common shareholders have **residual claim** on a company's assets. This means: 1. **Dividends are not guaranteed (Option A is incorrect):** Companies are not legally obligated to pay regular dividends to common shareholders. Dividend payments are discretionary and depend on the company's profitability, cash flow, and board of directors' decisions. 2. **No repayment of purchase price (Option B is incorrect):** Common shareholders do not have a legal right to get their investment back. The purchase price represents ownership in the company, not a loan that must be repaid. 3. **Residual claim in liquidation (Option C is correct):** In the event of liquidation, common shareholders have a claim on the company's net assets **after** all other claims have been satisfied. The priority order is: - Secured creditors - Unsecured creditors - Bondholders and other debt holders - Preferred shareholders - **Common shareholders (residual claimants)** This residual claim status means common shareholders bear the highest risk but also have the potential for the highest returns if the company is successful. Their claim is subordinate to all other stakeholders in the capital structure.

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