The correct answer is A, Common stock. Common stockholders are the true owners of a corporation and have voting rights, which allow them to exercise control over the company. These voting rights typically include electing the board of directors and voting on major corporate matters such as mergers, acquisitions, and other significant policy decisions. This ability to influence corporate governance is what gives common stockholders control.
In contrast, preferred stockholders generally do not have voting rights. While they have priority over common shareholders in receiving dividends and in liquidation, they do not participate in management decisions under normal circumstances.
Corporate bondholders are creditors, not owners. They lend money to the corporation and receive interest payments, but they have no ownership or voting rights, and therefore no control over company decisions.
Convertible bondholders also begin as creditors. Although they have the option to convert their bonds into common stock, they only gain voting rights after conversion. Until that point, they do not have control over the company.
Therefore, only common stock provides direct ownership and voting power, making it the security that entitles the holder to exercise control of the company.
