A Basic Legal Principle Involving Stockholders Is That

question 88

Multiple Choice

A basic legal principle involving stockholders is that

• A) an ownership interest in a corporation does not confer a legal right to manage the firm.
• B) the board of directors cannot elect the principal owner as president.
• C) all dividends are nontaxable.
• D) stockholders cannot buy new stock until it is offered for public sale.

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Definitions:

Incremental Value

The additional benefit or cost that arises from a specific decision or action compared to an alternative.

Equity-Financed

A way of raising capital through the sale of shares in the company, thus granting shareholders partial ownership.

Synergy Value

The additional value created by combining two companies, where their joint operation is more valuable than the sum of their parts operating independently.

Stockholders

Individuals or entities that own one or more shares of stock in a corporation, thus having a financial stake in the company's success.